7:20pm ET Webcast to follow.
The S&P Futures continue to be in Bollinger Band Compression mode. The bulls have been unable tom sustain any trade above the 2267-2270 area and have made no serious threat to take out the 2277 high. On the other hand the Bears have been unable to sustain any trade below 2260 as they squandered two pushes into the 2255/56 area yesterday. The result is a very whippy tape that over time fades back into the middle. This is the waiting room before band expansion. Anticipating direction for expansion is a very dangerous game that I don't recommend traders play. The number of handles associated with an expansion are more than enough and the length of time allows you to get involved with trying to guess the break. For today the parameters are basically identical to earlier this week. The bulls must convert 2267.50 and make a new all-time high and attempt to engage the upper band. The Bears must convert weekly pivot and now the 2255 area as well. The would include the daily middle band (20 day sma). The side that does their job will be in a good place to take the next leg of the market. Until then we wait, keep risk tight and size under control.
Wednesday's Post: "The S&P Futures continue to be in compression mode. The Bollinger Bandwidth remains below 2.0 and price runs higher then lower but eventually reverts to the middle. The ES closed in the 2264 area for the second session in a row. The 2259.50 area has been very reliable support for the bulls. Despite trading to 2274 yesterday the Bulls still could not make new all-time highs or hold 2267.50 as support on a pullback. The rallies have been sold and the dips have been bought. The tells for upside expansion would be 67.50 support and 73 support and a breakout for the Bulls. The tells for downward expansion weekly Pivot resistance, 59.50 conversion and daily mid band conversion for a breakdown to lower band for the Bears."
Tuesday's Post: "The S&P Futures spent Monday fighting over the old range top at 2267.50. Both sides tried to assert themselves but neither had the will to finish the job. The Bears pushed price below the weekly pivot (2262.7) to as low as 2259.50 but were unable to hold that level once Europe opened. We are technically on an upper band ride as we have engaged the upper band on the daily for two consecutive sessions. Bulls must print new all-time highs and initiate a squeeze if they are going to take advantage of the compressed bands and get the upside expansion they desire. Bears must do what they always need to do: convert weekly pivot and daily mid-band on a closing basis and then follow through to open up the Bollinger bands downward. That creates a 2277 high and starts a nice pullback. That's much easier said than done. Today will be about the same band of price as Monday. 2262.70 - 2267.50 - win the price area...win the week and maybe the month."
Monday's Post: "The S&P Futures made a new all-time high on Friday at 2277. It is a case of the Bears failing to capitalize on many opportunities to convert the lower areas of the trading range as well as multiple failed attempts on move price below the daily middle Bollinger Band (20 day sma) on a closing basis. That solidified the 20 day as support and after no real negative reaction to the jobs report there was nothing left but to walk the tape higher on a Friday. We are currently retesting 2267.50 resistance as support during the pre-market. Bulls want to now establish 67 as a support floor and make another higher high. Bears want the move to 2277 to be a reaction high before heading down to engage the compressed lower Bollinger Band and start the first band ride of 2017. One of the few setups over the past 5 years that Bears have been able to consistently deliver upon is downward band expansion. If bulls want the upper band ride they'll need to touch upper band today."
Friday's Post: "The S&P Futures finished where the started the cash session yesterday. The key to the day was the test of the daily middle Bollinger Band (20 day sma). The Bulls held that area as resistance and the Bears failed to do what we asked of them yesterday (convert daily mid-band and weekly pivot ). The result was a sloppy rally back to the 2265 area. As we head into the jobs report my attention turns to the compression of the daily Bollinger Bands. The Bollinger Bandwidth is sub 1.50 as I type this. The will result in expansion. That expansion doesn't necessarily have to come today. However, a strong jobs report reaction could provide the fuel needed for the short term market leg. That leg could be up or down. The key in trading band expansion is patience and an understanding that when expansion does come it will give you an opportunity to get in the trade. The risk in anticipating the direction of the expansion is great. Guess wrong and you are the squeeze or the collapse. Don't be that person."