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ES #F Supply Galore – Bull trap!
The daily chart of the S&P 500 mini futures contract above shows our proprietary SUPPLY and DEMAND Dashboard and BXB (Bar by Bar) Signals using data from the NYSE.
Yesterday we warned about some anomalies (Bearish volatility and weakened buying pressure on a big up move) and a possible Bull Trap! The ES closed lower on Friday by 55.00-points and closed at 2807.50 below the previous resistance of 2814.00. We cannot recall a Bull Trap reversal (Tom Williams called this price action a Hidden Up thrust), engulfing the previous six trading days!
Supply and Demand Dashboard is Bearish with the highest Supply reading since December the 24th, indicating Institutional selling.
The Transportation Indexes reached the lowest level since March the 8th.
The wide spread bar (59.50-points) with a poor close, engulfing the ranges the previous 6 days opened the door for more weakness to follow.
We expect resistance at 2797.50, and if broken the 2789.25 to 2777.00 level should offer resistance, however a bounce on Monday is possible before any further move down. If a larger Sell off develop next week, price can move to the lower 2700.00 levels.
Comparative Strength Watch list:
Comparative Strength of the Equities markets (in nearly all time frames - Daily to intraday) declined (pink), whilst the Bond markets increased (green), indicative of Smart money moving from the Equity markets to markets with less risks (Bonds). The $VIX strengthened and Transportation weakened.
End of the day Signals March the 22nd:
S & D Dashboard Algorithm turned Bearish with a reading indicative of Institutional selling
Daily Signals turned to the down side
These readings are an independent assessment of the one and only measureable fundamental market mover: SUPPLY and DEMAND. It does not matter if price is influenced by a geopolitical event, seasonality, fundamental economic data releases or sentiment driven news, etc. It all reflects in Supply and Demand, the “footprints” of the “Big Boys” or “Smart Money”.
A bounce to the upside is possible on Monday. Expect more volatility.
Links to recent research post
RUSSELL 2000 LEADS THE WAY FOR TECHNICAL ANALYSTS
The Russell 2000 ETF continues to deliver critical technical and longer-term price patterns for skilled technicians. Combining the IWM chart with the Transportation Index, Oil, Gold, and others provide a very clear picture of what to expect in the immediate future.
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