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S&P500 (ES) Reverses Most of September-October Dip

By:

CFA, Founder Tradable Patterns

The S&P500 (ES) is hesitating in today’s Asia morning after 4 days of gains.  Significantly, although ES is trying to extend the upchannel (on the weekly chart) after bouncing off its support 2 weeks ago, any break today below the ascending wedge support (on the 4hr chart) will dramatically increase the odds of ES forming a lower October high versus the September high.  Nevertheless, with ES just a day or so’s volatility from its record high in September, bears should not rule out a further short squeeze this week back to this key level.  Congratulations to paying subscribers who benefited from the February 18, 2020 analysis one day before the record high in the ES, warning of the pending slide in the S&P500.  The weekly and daily RSI, Stochastics and MACD are bottomish, rallying or consolidating recent gains.  I am looking to go short in the red zone (of the daily chart), targeting the green zone for Monday.  The amber/yellow zone is where I might place a stop if I was a swing trader (although in my personal account with which I seldom hold overnight I sometimes set my stops tighter).

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