This Monday morning we see the ES Futures about flat. Over the weekend they bust up through the falling green trendline of resistance and have since backtested it this morning. Looking at the MACD’s we’ve now had a “lower high” and are not pointing back down again on this 60 minute chart. The 2 hour looks similar and the 6 hour is still hovering up in the +10 level and is clearly still very overbought. That tells me that even if the 60 minute chart and the 2 hour chart do turn back up on their MACD’s the upside seems limited with the 6 hour chart still overbought. Since Mondays’ tend to have light volume I could see those short term MACD’s turn up and give the market a small rally today. But I think the market needs a little more time to reset other charts (like the 6 hour) as many are still too overbought. So while we might not breakdown below the 2150 horizontal support zone today we also won’t likely have the strength to make a new all time high today either.
My thoughts are that we’ll trend up a little in the morning session and drift back down later in the day, making it a choppy day likely staying below 2175 and above 2150. The SPX Cash is still pointing down on its’ MACD’s which suggests again that we’ll need more time to reset the charts back to bullish again. It doesn’t mean we’ll drop to the 2130 zone yet either as “if” enough time goes by we could see a sideways range instead that reset the charts to bullish. While we “should” drop into that range to get the stronger bullish setup we all know too well that the bulls don’t like to give up much ground. So let’s not rule out the “triangle” pattern being used to reset overbought charts instead of a nice clean ABC wave move down to that 2130 zone. For today though I’d be focusing on that falling trendline around 2175 to hold the bulls back today as that’s where they should stall out today. Other then day traders I currently don’t see much to trade today. It just looks like a choppy today inside a triangle. Possibly a setup (either bullish or bearish) will show up going into the end of the day as charts realign themselves. Naturally if I see a setup going into Tuesday I’ll post another update. But this morning I don’t see much worth trading.