Hey Traders,

very impressive OPEX week last week, while many signals were flashing long, nobody was execting a move of such magnitude.

SP500 took away 4 weeks of losses in 1 weeks move.

sp500weekly

SP closed back inside the big channel  going back to the start of the bear market. With what looks like little resistance all the way to 38% retracement from the very highs in 1015 area - which would also be almost exactly 23% range expansion of the rally from march lows.

Above there big retracement and trendline in the 1120 area on SP.

To start thinking about those levels ES/SP500 would need to get above this huge resistance band:

sp500daily

On the downside, last weeks lows in the area of major s/r band will remain key, with 100dma now also laminating in that area. As well as 200dma which will likely start flattening out soon

Conditions are very overbought, but with these rip-your-face-off-rally type deals they can stay that way for a rather long time. To start building bearish case would need to get below some moving averages on the hourly and get faster moving averages crossing down below slower moving averages, check out how simple 20×50 ema crosses on hourly were great indicators past fwe weeks (yellow boxes)

eshourly3

With major level on the downside being backtest of the channel right in 50% retracement area, which is also a gap. That will be key support level for the bulls to hold / bears to break shall ES trade down there.

On even smaller time frame - 2500tick chart, here are some key levels to watch for clues:
es2500t1

Will be watching the uptrend line, break of retracement zone in 928s and for ES to make a lower low below 920.75.

After such parabolic move it is a bit difficult to chart smaller time frames, so will certainly have more charts and data available throughtout the week as more price action develops

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More thoughts:

  • All short term momentum indicators are pinned overbought, while the moves can continue for a while on overbought momentum, they will have to do so without me as im certainly not chasing this tape and looking to fade
  • Put call ratio closed below 0.8 on 3 consecutive days including very low 0.7327 reading on Friday’s close, lower close reading since 5/26 - bearish
  • After July option expirys, the S&P has been positive only 27% of the time on Monday. Market has been ignoring anything bearish so far.
  • The last 9 times S&P was up every day of opex week, it was negative the next week, avg. -1.0%.

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As always will keep posting key levels and market internals developemnts intraday on my Twitter account @esecfutures as well as daily (and some intraday) updates here on the blog

Good luck and great trading this week

Vlad