Tuesday, May 5, 2015

S&P Emini Confirming VIX - Suggesting Anxious Bulls

S&P Index Emini future is lower this morning following a test of contract highs yesterday.  The bearish implications of the earlier failure from those contract highs reached late last month still weigh on the market and are expected to prompt additional long liquidation. (See ‘VIX Shows S&P Ready for an Unpleasant Surprise’ ) 

Today’s price action, should ESM5 settle below yesterday’s opening level of 2101.75, will create a ‘bearish engulfing’ pattern.  This development should be given careful consideration as its implications are made all the more ominous as a result of its occurring near the contract high.  As impressive as was Friday’s recovery, yesterday’s advance was not a convincing indication to lasting gains.

As indicated earlier, the sell-off envisioned is not expected to be of the 10%+ variety, but rather closer to 3-5-7% and in line with similar congestive trade over the last year or so.  For now, we should pay attention to a failed break of the late-February high and a recent retest that has not brought success.  There is ample room for disappointment on the part of the bullish contingency and this should show in the coming sessions.

An ESM5 June Emini future 3% pull back from high is 2056.16.   
An ESM5 June Emini future 5% pull back from high is 2013.76.
An ESM5 June Emini future 7% pull back from high is 1971.37.



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