Finally a Pullback – Charting ES and YM Stock Futures

Jul 21, 2015: 10:34 AM CST

Is this the pullback we’ve been waiting for?

Let’s do a quick morning update of the S&P “e-mini” and Dow Jones mini futures (@ES and @YM) with an emphasis on the divergences into resistance, and new support targets to play for.

Here’s the S&P 500 and expected pullback underway:

In terms of the S&P 500, we have a straight-up rally into price resistance at the prior highs near 2,135.

The two days of reversal candles – and intraday negative divergences – argued for greater odds of a pullback (retracement) down away from the highs as opposed to a continuation swing (breakout) higher.

In fact, as I highlighted to members last night:

“The [expectation] is the textbook, logical, historical technical analysis probability which would simply have us taking profits and getting ready for a short-sell/bearish swing down away from the 2,120 level [in the @ES Futures].”

So far, that’s precisely what we’re seeing this morning as we view the @ES Futures Chart below:

Bears finally caught up with buyers as divergences finally caught up with the non-stop upward price action.

Price (in the @ES) peaked so far into the 2,125 level and turned sharply lower this morning.

Note the build-up of negative Breadth Divergences as the rally extended.

Breadth is strongest at the start of the rally – as highlighted off the 2,040 level – and then deteriorates over time.

A swing cannot last forever; it must retrace (at a minimum) if not outright reverse.

Target levels include the 2,105 price and 23.60% Fibonacci Level and then the 2,092 @ES Pivot.

Here’s the same picture in the Dow Jones “Dow Mini” Futures (@YM) which has been slightly weaker:

The Dow Mini Futures peaked above 18,500 on a lengthy build-up of negative momentum divergences.

Like Breadth, Momentum is strongest at the START of a swing and then declines as price moves higher.

Gravity – supply/demand imbalance – catches up with price and we get a quick sell-swing we’re seeing now.

Watch the @YM here off the 17,000 level which retests a round number and the opening gap from July 13.

A further sell-off here opens a sell pathway lower toward the 17,700 pivot.

Continue watching these levels as price pulls back from resistance… or alternately turns and reverses bullishly from here, once again defying the odds and surprising traders with another short-squeeze.

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Corey Rosenbloom, CMT
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3 Responses to “Finally a Pullback – Charting ES and YM Stock Futures”

  1. July 21 Stock Scan and Sell Swing Market Update | Afraid to Blog Says:

    […] a bit more context than the chart above, be sure to see this morning’s update on the “Retracement in the @YM and @ES” […]

  2. Farhan Says:

    Looks pretty decent to go short here, but of course we are required to be extremely careful in what we do, as it’s just about one small mistake which could spoil everything, so that’s why we need to be pro-active. I can be fearless while trading due to advantage of the 50% bonus that’s given by OctaFX broker, it’s pretty special company and has outstanding features and facilities which include low spread of 0.2 pips, high leverage up to 1.500.

  3. Micky Says:

    I think we can easily expect the pull back to be much far
    since it has happened after quite a while, I won’t be betting on it but just
    feel that way. At the moment I am mainly focusing on long term trades and due
    to OctaFX broker’s support, I am in pretty good shape and that’s especially
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