In last weekend's update, I wrote: "I am looking for somewhere in the 3750/3700 area to trigger a buy in coming days." Price hit the 3750/3700 area as projected, and we covered our fresh short trade for 3.5%, or 135 ES points before the big rally happened on Friday.
And now, we are waiting for a fresh signal to trigger preferably a buy signal at lower levels. Or a sell re-entry at higher levels -- this one however is going to be very tricky to navigate.
On price, the 3890/3915 area on the Emini S&P 500 (ES) is filled with strong resistance and my view is that we do not make it through this area right away. Instead, we fall back lower maybe for a retest of the lows from last week or lower. If we get to last week’s lows or slightly lower, and it looks like that low is being bought, we are likely to get a fresh Odds Indicator buy signal from those levels.
If so, we will establish new long positions there. In my view, the market does not have enough internal strength to directly move higher from here, but will instead look for support at lower levels before moving back north. Also, this week Wednesday is WWW -- i.e., the Wednesday of the week before options expiration week. More often than not, we get a pullback into this timeframe, which sets up a rally into monthly options expiration day.
Let us look for something similar happening this time also.
Grey zone resistance at 3867-78 and then at 3900-3912. Support is at 3840-26, 3788-75, 3731-20 and then at 3665-51.
For Monday, daily pivot is at 3806.5. Resistance R1 is at 3884 and R2 at 3928. Support S1 is at 3762.5 and S2 at 3685.
All the best to your trading week ahead.