E-mini S&P500 Medium-Term Market Analysis

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Hello to all Slopers, before we begin the analysis of the E-mini S&P500 today we want to make a brief re-cap of what was the situation in our last post 10 days ago. Basically we suggested to NOT GO SHORT, because the market was oversold, and we indicated the ~2040 price area as the most likely bottom, you can read it all in our previous post indicated above. The market massively bounced from there, hopefully you have followed our advice and avoided going SHORT at the bottom. Today we will look at the market and try to forecast with our models what is in store for the next 1-2 weeks.

For those that are new to Retracement Levels, we are a european-based quantitative research company that since 2008 has provided traders and investors with innovative quantitative models that forecast the probability of trend reversals from specific price levels, our models are applied onto HOURLY, DAILY and WEEKLY and MONTHLY time periods and work for a selection of various markets: ETFs, Commodities Futures, indexes and FX Spot. Courtesy of Tim Knight, we are here to present you our written E-mini S&P500 Analysis. If you like this analysis and want to receive it every day in your inbox, simply click here .

Chart Analysis

Last week the market bounced back and in one week it recovered the entire correction that took 3 weeks to unfold. Lately it’s almost as if volatility it’s reversed: it used to be that it takes 1 week down to wipe away a 3-weeks up gain, but if we look at the market action in the last few weeks, the opposite is true: 4-weeks corrections are recovered in 2 weeks, 3-weeks corrections are recovered in 1 week, and so on.

The ESM15 WEEKLY chart below is showing us the two possible paths from here, based on support/resistance levels derived from our models: the black arrows path show a rise to the ~2120 area, followed by a pullback to ~2100, while the green arrows path show a pullback to ~2070 followed by a rise towards ~2100, basically no matter what path the market follows in the next 1-2 weeks, we are going to end up again most likely in the ~2100 area, which is just a few points below the current all-time highs for this market. Any move sharper than the ones predicted will trigger a retracement in the opposite direction, so we will analyze that if/when we cross that bridge.

index

TO GO LONG

CCOC – Consecutive Closes Odds Calculator (TIME EXTENSION ANALYSIS)

The TIME EXTENSION ANALYSIS model below shows how many consecutive lower closes (bars) we had on each time period and puts this information in a statistical context.

The DAILY time period gauge shows “0” days down.

The WEEKLY time period gauge shows “0” weeks down (updated at the end of last week).

The MONTHLY time period gauge is showing “0” months down (updated at the end of last month).

CCOC LONG

RL – Retracement Levels Odds Comparator (PRICE EXTENSION ANALYSIS)

The PRICE EXTENSION ANALYSIS model below shows how far a price retracement (downtrend) can go on each time period, based on the statistical analysis of all the historical retracement patterns that share similarities with the current retracement pattern.

The DAILY time period offers good support at the 2073.50 level (highlighted below): 65.94% of the events recorded in history are scenarios where the market does not go lower than this level during this type of retracement pattern. The market may actually pull back less than this, and go higher. 2073.50 should be in our view the limit for a pullback (if the current uptrend is about to continue).

The WEEKLY time period offers weak support at the 2067.75 level (highlighted below, best match for the DAILY level). 19.23% of the events recorded in history are scenarios where the market does not go lower than this level during this type of retracement pattern. This is OK as WEEKLY pullbacks offer little or no support during uptrends.

The MONTHLY time period offers weak support at the 2071 level (highlighted below, best match for the DAILY/WEEKLY levels): 3.13% of the events recorded in history are scenarios where the market does not go lower than this level during this type of retracement pattern. This is OK as MONTHLY pullbacks offer little or no support during uptrends.

The big gauge on the right hand side of the table below shows that 29.43% of the DAILY+WEEKLY+MONTHLY (combined) cases recorded in history, are scenarios where the market does not go lower than these levels during this type of retracement pattern. Overall this LONG setup is not so interesting for long-term allocators, although the DAILY level is good enough for short-term traders to enter a LONG trade.

>> Click here if you want to receive this analysis every day in your inbox.

RL LONG

TO GO SHORT

CCOC – Consecutive Closes Odds Calculator (TIME EXTENSION ANALYSIS)

The TIME EXTENSION ANALYSIS model below shows how many consecutive higher closes (bars) we had on each time period and puts this information in a statistical context.

The DAILY time period gauge shows “1” day up. 41.88% of the events recorded in history are scenarios where the market closed up 1 day and then the next day was closing down.

The WEEKLY time period gauge shows “1” week up. 45.16% of the events recorded in history are scenarios where the market closed up 1 week and then the next week was closing down.

The MONTHLY gauge shows “1” month up (updated at the end of last month). 36.96% of the events recorded in history are scenarios where the market closed up 1 month and then the next month was closing down. This says that the market can rise this month, or at least that is what it does, on average, after 1 month up: it rises in 2/3 of the cases.

>> Click here if you want to receive this analysis every day in your inbox.

CCOC SHORT

RL – Retracement Levels Odds Comparator (PRICE EXTENSION ANALYSIS)

The PRICE EXTENSION ANALYSIS model below shows how far a price retracement (uptrend) can go on each time period, based on the statistical analysis of all the historical retracement patterns that share similarities with the current retracement pattern.

The DAILY time period offers strong resistance at the 2123.00 level (highlighted below): 75.09% of the events recorded in history are scenarios where the market does not go higher than this level during this type of retracement pattern. This level is where the DAILY trend will find serious resistance to its advance.

The WEEKLY time period offers good resistance at the 2124.75 level (highlighted below, best match for the DAILY level): 56.82% of the events recorded in history are scenarios where the market does not go higher than this level during this type of retracement pattern.

The MONTHLY time period offers good resistance at the 2147.00 level (highlighted below, best match for the DAILY/WEEKLY levels): 62.50% of the events recorded in history are scenarios where the market does not go higher than this level during this type of retracement pattern.

The big gauge on the right hand side of the table below shows that 64.80% of the DAILY+WEEKLY+MONTHLY (combined) cases recorded in history, are scenarios where the market does not go higher than these levels during this type of retracement pattern. This setup is quite good for short-term traders, as the DAILY has high chances to see a reversal from 2123, but it is also useful for long-term asset allocators as it is saying “don’t buy at the top”. For the long-term trend, there is room to go up to ~2250, a price area from where a major WEEKLY/MONTHLY correction will become highly probable.

RL SHORT

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