A return to the scene of the crime is a regular feature of stock market breakouts. When prices break through a previous top, they run for a bit, but typically they then sneak back to the site of the break before going on the lam again.
That’s where we are this morning on the ES, 24 hour S&P futures. If they drop no further than 5110, then the pattern remains bullish. The conventional measured move target of the high base breakout for 5165, would still be a strong possibility. Even if they get back to 5100, that might still be in the cards. Below that, then, and only then, could we start thinking about possible top formation.
Time is modestly in favor of the bulls today, with a 3 day cycle low ideally due this morning. But if the up phase fizzles, then we’d look toward Thursday for a 5 day cycle low, perhaps below 5100.
But if they clear 5150, then not only 5165 would come into view immediately, but 5180 would be the next likely target on the next 3 or 5 day cycle upleg.
How Stocks Can Forestall the Inevitable
LEE ADLERThe Fed’s weekly real time balance sheet data and its slightly lagged data on the condition of the US banking system still show little sign of an imminent end to the stock market rally. Only the Foreign Central Bank trend is negative, and that on its own isn’t sufficient to turn the market. It needs help, and there’s none to be found. The bulls are running wild. Non-subscribers, click here for access.
Subscribers, click here to download the report.
As they do, prices of stocks rise. And that creates its own vicious cycle of liquidity creation leading to higher prices, and so on. This is how manias become entrenched. They continue until they are exhausted. We look for signs of exhaustion both in the technical market data, which I report in the Technical Trader reports, and in the liquidity data that I report here. In neither case are there signs that this rally is finished yet. But I’m on the lookout. Non-subscribers, click here for access.
The end may come quickly, so we need to be prepared and vigilant. Complacency is the trader’s enemy. We must guard against that. Non-subscribers, click here for access.
KNOW WHAT’S HAPPENING NOW, before the Street does, read Lee Adler’s Liquidity Trader risk free for 90 days! Act on real-time reality!
10 Year Treasury Yield, stuck in the middle with you.
For moron the markets, see:
- The Magic of Rising Stock Prices Driving Liquidity, Driving Prices March 4, 2024
- How Stocks Can Forestall the Inevitable March 4, 2024
- Tax Collections Took Off in a Stunning Reversal in February March 3, 2024
- Swing Trade Screen Picks – Read My List, No New Shorts March 1, 2024
- We Don’t Need No Stinkin’ Fed – We Make Money from Nothing February 26, 2024
- Gold Holds for Hold February 24, 2024
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