Glancing at the recent price activity of the /ES, it would be easy to shrug one’s shoulders and assume that things just keep slip sliding away. Now, I am creating this post several hours before the futures open on Sunday afternoon, so I have no idea what those quotes are going to look like, but as I sit here prior to the week starting, I am banking on (and hoping for) some strength early on.
Early on Friday, I took profits on about 25% of my positions, prompted by the proximity of the /ES to a couple of major levels of support. Ironically, the worst scenario for this permabear would be for the market to go screaming lower. On the contrary, Mr. Let-Em-Burn wants buying to take place to give him some good prices to re-enter these positions (more specifically, to re-establish the full position, since in fact I exited almost no position at all altogether).
So if we get strength, how much strength would be enough to make for an appealing risk/reward ratio? Well, I dunno. But my sorta-kinda guess is around 90 points higher than Friday. I’ve roughly estimated by way of this rectangle where it would be very tempting to get aggressive again.
Using a more finely-grained chart, you can see the same confluence of overhead supply constituting a logical basis for a reversal.
The Russell 2000 (which actually went green Friday) speaks to the same case.
Of course, the two monster events this week are NVDA earnings (post-close Wednesday) and Powell’s Jackson Hole speech (about half an hour into the trading day on Friday). Shadowing over all this is the launch of Bear Force One mid-day on Wednesday, which might shake the cosmos up a bit. Let’s just say I’m anticipating the week with a combination of mild dread and fitful anticipation.
