ESH5: Reaching For A New High On Friday The 13th

Yesterday (Feb. 12)

Peace has allegedly broken out in the Ukraine, and that was enough to send the S&P500 mini-futures (ESH5) roaring up to new highs for the year, and, as well, close to the all-time highs recorded in December.

The new Ukrainian peace deal looks suspiciously like the old Ukrainian peace deal – you know, the one that collapsed within a couple of weeks – but it was still enough to provide a rationale for what the market wanted to do anyway, which was move beyond the rectangle pattern that has been holding it down for the past six weeks.

The minis have now advanced more than 100 points from the low made on the first trading day of this month. Yesterday it gapped up at the open and closed near the high of the day at 2084. It filled the gap at 2083.50 and closed above it and the tone is definitely bullish (See chart).

Today (Feb. 13)

Today is Friday the 13th, and the last trading day before a holiday weekend. With the market closed on Monday for President's Day, traders will be leaving early and looking to balance their positions before they start the holiday.

Nobody wants to hold an open position over a long weekend with so many potential market-shaking events – war or not-war in Ukraine, debt crisis in Greece, the shattered inflationary hopes of central bankers everywhere – lingering in the background.

Now that ESH5 has moved outside of the familiar rectangle pattern, the most likely direction today is up, although we may see some profit-taking early and account balancing later in the day.

But none of this will change the short-term uptrend direction. As long as ES stays above the 2065-2070 zone, essentially the break-out area from the rectangle, sentiment will still favor the upside. Traders will likely be buying the dips for a couple of weeks.

Now, 2050 becomes a major support line, and the 2065-70 area, the broken resistance zone, becomes the first support line in defence of 2050. On the upside, a break above 2092 will be bullish. In that case, we may reach the next upside target at 2100-05 and a new all-time high.

  • Major support levels: 2056.50-2054, 2035-38.50, 2020-18.50, 2007-09.50
  • Major resistance levels: 2089-88.50, 2096.50-98.50, 2105-06.50

ESH5 Feb. 12, 2015 60-minute bars

 dampier.2.13.15.png

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