06/02/23
Yesterday’s debt deal passage, was not good news for everyone.
It looks like speculators over-hedged to the downside, and got caught in a squeeze when the deal got done faster than expected.
The deal (and the damage) are done…until January of 2025 when we will be going through this exact same scenario again.
Today we are looking at the S&P 500 in the wake of the deal, where it is, and more importantly where it is headed.
Here’s the S&P 500 E-mini Futures(ES):
We’re on the 4-Hour chart today, looking at the tail end of last week until now.
I’ve mentioned previously that I dig this time frame a bit more than the daily. Don’t get me wrong, I refer to the daily as well.
But I prefer to frame my trades on the lower time frames which is why it’s important to see what just happened and where we could be headed…
The shortened week started off with a bang, but a higher high was swiftly rejected once traders came back from the holiday…
Using the Fibonacci Retracement, you can see that the index failed to drop.
Instead, it was a pullback to 61.8%-70.5% levels…
(My ideal retracement.)
On the lower chart, Volume Accumulation briefly went red, only to turn positive early yesterday morning…
Now, the first real clue we have is off of the TTM Squeeze/Ballista which is a combination of a regular 20-period and 40-period squeeze setup.
The green arrow at the bottom notes a divergence where the 20-period went below the zero line and crossed into negative territory… Not the 40-period, though.
This is an early buy signal.
Back to the upper chart…
Yesterday’s blistering move consolidated overnight right where it was previously rejected.
This is after the chart matched the weekly candle’s opening price to the penny.
There are no coincidences!
And if you find higher consolidation in the Asian session, you can bet that the chart will pump higher.
As for an upside target in the near term, I’d look for 4255 and then into the 4260+ levels…
That is, after we get a deep pullback.
The chart needs to reset if it’s going to continue to the highly-coveted 4300 area…
Trade it wisely.
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