IWM has been pushing up quite strongly as of lately, it is up 4 days in a row and in our view ripe for some pullback soon.
The NFP numbers knocked it out of the park, and a December rate hike from almost nothing to slightly more than nothing now looks likely. For the moment that looks bearish, though a barely perceptible token rate hike from a Fed stuffed with doves is a little hard to take seriously, and may not remain bad news for long.
In the short term I have the move from the high as a falling megaphone and there are three main options here which I have laid out on the chart. From here with the ES low at 2083 the main remaining options are to either break back up to retest the high, or to break down from the megaphone into a target area in the 2040-50 range. I’m leaning towards the bear option with a trend down day, but keeping an open mind. SPX 15min chart:
One thing I have always admired (and envied) in our host, it’s his top class ability to summarize clearly a trading idea in one single clean chart, so today I am going to make an attempt at copying Tim, to suggest that ES is now a WEEKLY SHORT trade (the rationale behind this setup IT’S NOT IN THE CHART HOWEVER, it was explained 2 days ago in this post).
The ESZ15 market closed another week up last week, this is the 4th week up in a row. By historical statistical means, it is not very common to see 4 or 5 weeks up in a row (or more). To give you and idea the most common pattern is one-two weeks up, followed by 1-2 weeks down. Obviously this does not happens ALL the times, but it does happen quite often.
Let’s have a look at the ES WEEKLY chart below, for the last 2 years, we have put a red arrow on top of each WEEKLY Close that was of this type:
1 Week up, then reversal next week (negative weekly Close/s).
2 weeks up, then reversal next week (negative weekly Close/s).
(Note from Tim: 2sweeties is resuming more frequent posts here on Slope, and this is another. With all humility, and mainly because I’m talking my book here, I disagree with a bullish disposition toward crude oil, but Lord knows I’ve been wrong on occasion before. Here ya go:)
This trade could work as quick trade with a target around ~16, but if after that you want to hold with a Trailing Stop in the hope of a much larger uptrend… you can do that, maybe you are lucky and it works.
To find where to exit our trades, we usually check the opposite model direction, for example if you enter a trade LONG with the LONG model, then you can use the SHORT model to know where to exit and take profit.
Let’s have a look to USO’s DAILY chart:
The ESZ15 market last Friday closed the week up for the third week in a row (see chart below). There has been a slow down in the bounce and we expect to see some pullback this week.
Usually this market does not go beyond 3 to 5 weeks up in a row, as you can see from our Time SHORT model below (check the WEEKLY gauge, very overbought =81.23%):