Overview
of the S&P500 Futures Market
The
market has found resistance at an important repeating price vibration
of 1368 being exactly 100% of the previous range. This is also on
strong solar time. The time and price components for a change in
trend are strong. But this is only part of the story as Gann
advises.
Position,
pattern and volatility are not yet confirming a move to the short
side. For a change in trend to be considered all 5 factors need to
be satisfied.
As
a result the trend is still considered long. However we need to be
on alert for the markets next move.
Manage
our open long positions with stops under the last swing bottom at
1332.
New
trades are optional however entry would need to see the 1368
resistance level broken first.
Aggressive
traders could consider a change in trend to have occurred once the
1333 swing bottom is broken. But the safer short entry as stated by
Gann is once a lower swing top and bottom has been made. We will
discuss this in the event the market moves to the short side.
Gann
Analysis Consideration – Time, Price, Position, Pattern and
Volatility.
Time
The
swing top on the 22nd
February is:-
90
solar degrees from 25th
November 2011
225
solar degrees from 8th
July 2011
315
solar degrees from 6th
April 2011
Price
The
current swing top of 1368 is at the 100% level of the previous bull
range. This level puts us on high alert for the possibility of a
change in trend. The bull run needs to break this price vibration
level before we can consider opening any new positions.
Position
The
market is showing strength by achieving 100% of the previous run –
a break through this level signals further strength. It is also the
double top level of May 2nd
2011. Any further bull move through these levels of resistance will
signal further short term strength.
Pattern
The
daily swing chart is starting to show a few choppy irregular swings,
but not enough to clearly show a change in trend. The pattern may
indicate weakness but the trend remains long for the moment.
Volatilty/Volume
Remains
steady at the lower levels. Any change of trend or signal day may be
accompanied by higher volume. Volatitly of the days range is also
decreasing as a result of lower volumes. Any increase in either of
these may result in trend change. Time to be alert
Summary
Trend
Direction
Daily
Trend:- The daily trend remains long at this point. However I am
very cautious of the time and price levels aligning with the 22nd
February. These setups are possibilities
for a change in trend to occur. But at this point the market has not
signaled a move to the short side. As a result we need to manage
stops and open long positions once price levels of 1368 are broken
Trade
Management
Open
Trades:- Stop Loss positioned below previous swing bottom at 1332
New
Positions:- Entry 1370 – 1 Point above 100% level with stop loss
placed at the swing bottom of 1349.
Trend
Reversal
Aggressive
trading would consider a change in trend once the swing bottom is
broken at 1332. All long positions would be stopped out and closed
at this level and new short positions could be opened at the same
point. Stop loss for short positions would also be placed at 1369.
Elliott
Wave Analysis
Elliott
Wave analysis can be helpful when considering position of the market.
Position is one of Gann's 5 factors in determining a trade setup or
trend direction.
From
and Elliott Wave perspective we see the market structure unfolding as
follow:
The
main concern relating to this count is that Wave 2 Primary is about
to exceed the origin of Wave 1. We also need to point out that on
markets such as the Nasdaq and Dow Jones this has already occurred.
This is where the limitations of Elliott Wave are seen. A new count
maybe necessary in up the upcoming week and trading based on this
information alone can be costly.
