ESH5: Stealth Rally Is Creeping Higher Quietly

Yesterday

The S&P 500 mini-futures (ESH5) made a new high for the year yesterday in intraday trading, and nobody noticed. No fireworks, no bombs bursting in air, but the large-cap index has now gained 90 points so far in the month of February, while investors fret and worry.

After the market closed, Cisco released a wonderful earnings report and the futures took off. The market ran up to 2079.50 (10 points below the Dec. 29 high) on very low volume, then dropped back 20 points to the regular session closing price – a classic pump-and-dump move. (See chart below.)

None of this has any relation to the real-world economy.

ES has probed outside of the rectangle pattern we discussed earlier this week, but not in a very convincing manner.

This is a favorable season for buyers, but we are seeing very timid participation in the rally from big-money traders. A continuation of the sideways shuffle of the past two months will disturb even the most enthusiastic buyers, and when the buying season is done, we may see a big drop if the ES fails to move above 2090. 

Today

But that's farther in the future. Today (Thurs. Feb. 12), we may see ES move up to 2075-78 (short entry)  or higher up to 2083.50-85.50 (short entry) to fill the 2083.50 gap.

But even if we make a higher high in overnight trading, a quick reversal should be expected. Traders will continue to focus on the 2056.50-58 support zone. A failure to hold above it could lead ES back down to 2045-35 again.

  • Major support levels: 2035-38.50, 2020-18.50, 2007-09.50, 1988-86
  • Major resistance levels: 2075.50-78.50, 2085-88.50

ESH5, After-Hours Feb. 11, 2015. Five Minute Bars

 dampier.2.12.15.png

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