E-Mini Equity Index Debacle

ES Daily

I mentioned 2750 as a target for downside for the S&P e-mini based on the size of the first wave down and the pullback level after. Have to admit, I didn’t think it would happen so quickly.

The daily chart shows a head and shoulders, with March being the left and May, the right. The neckline is quite well defined at 2800. Assuming the head and shoulders acts like one that works, there could be a drop to 2650 (150 points below 2800). 2650 makes sense from the weekly narrative.

The two moving averages on the chart are the 54 day and 162 day. At the beginning of the week, the 162 looked pretty safe.

ES Weekly

The weekly gives a nice picture of the triple top. Things looked a lot better at the beginning of the week. The 52 week average was easily and decisively broken even though this was an area of congestion for a year and a half.

2750 is not a stable place. This was the level reached on the day before the midterm election, there was a notable gap up, the day after. Also the following few weeks saw the entire up move retraced. The action at the 2750 area in 2019, has been tentative. The March pullback from 2825 in March stopped at 2726.

2650, mentioned above, is the area of the late January early February consolidation. That three week period saw a low of 2572 and high of 2721. It seems evident that at least part of that range will be a topic of discussion.

ES Monthly

One doesn’t see many pure (all body) super size range candles on this chart. May was sort of like December 2018 except it didn’t have a bottoming tail. This could morph into a reverse head and shoulders over the summer, but doesn’t look like anyone’s definition of a bottom. It should be kept in mind that negative months don’t happen much and it is unusual to see consecutive ones. The sages tell us to buy fear and sell greed.

The 2510 of the 39 month moving average is the key number. That is about 15% off the high made on May 1. There could be strong rallies at any of the various levels, perhaps with the one exception of this one. Of course, there is nothing special at 2610 that will magically stop a decline.

NQ Monthly

NQ either made a triple top with a deformed shoulder or a spectacular double top. The 39 month average is at 6147. The May body looks at least as large as the December 2018 body.

RTY Month

RTY looks like the ghost of Xmas future. It could only rally back up to the 13 month moving average and is now about to contact the 39 month. It has also penetrated body of the January 2019 rally candle. Notice that RTY touched levels in December that were made in 2015.

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