CME_MINI:ES1!   S&P 500 E-mini Futures
ES at the daily view.

ES seems like that it is about to fully transition into a new price structure. The dotted green line was the old trend line support from April to September. The orange line is a historical resistance that has its origins from 2009. I call it the "Hodor Line." The line held the door for a decade now. The ES has been trying to decide between the two trend lines for months now. That said, I don't think the Hodor Line will last forever.

There is definitely a rotation from tech to non-tech sectors. The non-tech sectors like financials and energy were basically overly shorted. What happens when there are too many shorts piled up? A bear hunt will likely occur as soon as there are enough buyers. More trapped shorts below means more bounces... and it becomes way harder for a solid selloff. Once market breadth increases, rallies become more sustainable.

That said, the ES is still very overextended at present. Either there will be a correction by price or by time. I'm hoping for the former. The latter is just painful.

In the big picture, the ES is consolidating for a bigger move later. From the looks of it, it may pullback first for weeks and then aim for a breakout - once market breadth increases.

Why? Simply, TINA (There Is No Alternative). Bond yields are almost at 0%. Cash is weakening. Savings rates are dismal. Real estate is ridiculously high. What is left for investors to park their cash? Equities and crypto.

Is this game rigged? Yes. Does it matter? No, it doesn't. Real traders know their job is to profit whatever the market gives them. They know that they are the players of the game - not the game creators. The market is like life. You can complain about how unfair it is. However, you still have to make the best out of the situation.

Comments

Nice work. I'm waiting for a pullback so I can get back in.
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Nice write up!
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Excellent, valuable writing... thank you!
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Wise words
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