Monday, September 28, 2015

Emini S&P; Still Suffering Defeat from 'Three Dark Soldiers'

The S&P Emini is experiencing its heaviest trade since the first day of this month and is testing a downward sloping, lower channel trend line dating from the bearish shooting star on September 17th.  There have been 6 new lows in the last 7 sessions following that bearish shooting star.  Today’s retreat reaches below the low from September 1st.  The topping pattern at the September 17th shooting star is consistent and confirming of the resistance found at the ‘hanging man’ reverse of August 28th. 

There are currently some modest and very short term oversold conditions.  However, the recovery from the ‘bullish inverted hammer’ on August 25th and the subsequent consolidation within the rather wide 1900-2000 range reduces some of the longer time frame oversold conditions that existed in late August. 

Longer time frame, the bearish ‘three dark soldiers’ (August 19-21) offered a strong selling signal that continues to provide directional guidance.  Strong recoveries since have been thwarted with penetration reaching only into the third dark soldier.   



Large non-commercial accounts have been net-short the Emini since March of this year and last week covered only a modest portion from the prior week’s 4 year low.     

The damage done in mid-August has been considerable and the bearish trend has weathered a couple attempts to right.  Currently the bearish contingency is gaining strength and will become embolden following a breach of the August 24th low of 1823.  A settlement below that Aug 24 session (1862.25) would also signal likely additional forthcoming weakness. 

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