The ES is and has been the leader and it's giving us a Monthly warning sign...
The thin red line on this chart is the monthly Tenkan Sen (or Conversion Line)...as of today we closed the month of Feb below this line. Upon studying the ES on a monthly basis from 1998 you can see that 10/11 times this happened the following month/months will either re-test the low or a new low will be made. PLEASE NOTE-I only used the times when ES was in a monthly UPTREND....if I used the times we were in a downtrend this statistic would actually be even worse.
Over the weekend and today a lot of bulls were celebrating that a low has been made and we are off to ATH's again. Most of the folks I follow on Trading View have turned Bullish . While I understand that the bulls made great progress the last three trading days, I also have to look at the charts and ask myself...are we really bullish? In the very short term (last two months) the trend is down and charting has not confirmed a change in the very short term trend to bullish /up.
Ask yourself this, were you sweating bullets as soon as the market opened on Thursday, Feb 24th or were you up all night on Wed worried? Honestly answer this to yourself...if you were, then remember that there is a 91% chance that we will re-test the lows made on Feb 24th. There is a 82% chance we will make a lower low.
"This time will be different" only has a 9% chance of being correct in the last 24 years.
The point of this post is that if you were feeling pressured on the 24th use this upswing to sell off some risk into this strength. Or look at your portfolio and set reasonable stop losses such that you are not irrationally selling if we reverse course, go back down and possibly make a new low in March. The downfall can sometimes seem like it's never-ending so make sure you are prepared for the 90% chance.
The thin red line on this chart is the monthly Tenkan Sen (or Conversion Line)...as of today we closed the month of Feb below this line. Upon studying the ES on a monthly basis from 1998 you can see that 10/11 times this happened the following month/months will either re-test the low or a new low will be made. PLEASE NOTE-I only used the times when ES was in a monthly UPTREND....if I used the times we were in a downtrend this statistic would actually be even worse.
Over the weekend and today a lot of bulls were celebrating that a low has been made and we are off to ATH's again. Most of the folks I follow on Trading View have turned Bullish . While I understand that the bulls made great progress the last three trading days, I also have to look at the charts and ask myself...are we really bullish? In the very short term (last two months) the trend is down and charting has not confirmed a change in the very short term trend to bullish /up.
Ask yourself this, were you sweating bullets as soon as the market opened on Thursday, Feb 24th or were you up all night on Wed worried? Honestly answer this to yourself...if you were, then remember that there is a 91% chance that we will re-test the lows made on Feb 24th. There is a 82% chance we will make a lower low.
"This time will be different" only has a 9% chance of being correct in the last 24 years.
The point of this post is that if you were feeling pressured on the 24th use this upswing to sell off some risk into this strength. Or look at your portfolio and set reasonable stop losses such that you are not irrationally selling if we reverse course, go back down and possibly make a new low in March. The downfall can sometimes seem like it's never-ending so make sure you are prepared for the 90% chance.
Comment:
We did re-test the lows and are clearly very bullish right now HOWEVER the ES is the only index whereby the death cross has been saved. IMO we need to keep the uptrend going as a bearish daily closing below the 200 EMA on the ES could quickly reverse this uptrend and waterwall downwards to create the cross. Keep you SL's within reach and don't bag hold if we start to reverse course!