#ES_F #SPY Bias Update and Levels for Tuesday, September 15, 2015

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ESZ5 remains in a macro sideways, consolidation, and wait mode pattern ahead of the FOMC rate decision which unfortunately means a very long and boring week until Thursday. However while volatility is low this is a great week to get positioned before the overall market resolves itself post the FOMC rate decision, which I am doing so through several new strangle positions in SPY, USO, and several individual stocks as well.

I am personally not in the camp the Fed can or will hike rates in an environment post a pre-market flash crash which came on the heels of major global economic growth concerns especially out of China. I am more in the belief the Fed got greedy late 2014 and early 2015 when the US stock market was at/near ATHs and missed the boat/window for a first rate hike. Most likely the Fed did not want to cause any stock market concerns throughout the holidays and finish on a high note in 2014.

Although I expect a "no" rate hike it is only a personal bias and I have no idea how the market will react to a rate hike or not; this is why I am not positioning myself to one side. Even if there is a rate hike it is highly unlikely a +.25 rate hike will ignite the Fed & central bank bubble burst.That day is coming and likely in the very near future regardless of a rate hike this week or not or even in December.

If the market goes in full bull mode post the rate hike decision I will be looking to lock in most profits from the Call side of my strangles ahead of the key resistance for EZU5 at 2032s/33s.  

Once the Call side profits are achieved I will the be looking for macro lower highs to form below the 2032s/33s resistance as confirmation ATHs will most likely be negated and the upside post the rate decision will just be an initial reaction and what I hope will also be the beginning to the end of the artificial "bad econ data is good for stocks" era. It is going to take more than a "no" .25pt rate hike to justify new ATHs with all the global growth uncertainty. 

If the immediate reaction is bearish I will have an eye on the October 2014 low before ESZ5 heads to the Daily -3Sigma target and below 1800 to lock in profits from the Put side of all my strangle positions.

Ethan Premock

Futures & Options Strategist
Hamzei Analytics, LLC

      

Index #ES_F #SPY Bias Update and Levels for Monday, September 14, 2015

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Not expecting any major and/or meaningful moves in any index ahead of the FOMC rate hike decision this week. ESZ5 +30-50pts or -30-50pts from where ESZ5 is current trading should and will likely mean absolutely nothing ahead of this week’s FOMC due to the potential of a rate hike or not.

I still find it completely hilarious (as I have mentioned before in a previous blog post) at how the entire/overall US stock market remains 100% at the mercy to a +1/8^th or +1/4^th (.25) point interest rate hike. I cannot stress enough that a .25pt rate increase will have no dramatic negative impact to the US economy nor will it have any impact to the 82% of Americans who do not participate in the US stock market.

Not only will a +.25 rate hike have zero impart to the US economy a no .25pt rate hike this week (or in December) will not help any of the concerns and uncertainty in global economies especially China. All a .25pt rate hike is to US investors and trades is the likelihood and potential end to easy/free money and the beginning of the end to the “bad econ data is good for stocks” era.

My current thoughts are Shorts are going to cover no matter if the Fed does a rate hike or not due to no rate hike is good for stocks and if a rate hike CNBC will then be none stop that a +.25pt rate hike equals and suggest the US economy is now in the all clear.

Even if the initial reaction to rate hike is bearish I still think the market will find a reason to rally before a real and meaningful trend is determined. This means what will matter and be more important to me is the follow through in either direction and/or rejection reversal post the rate hike decision more so than the initial reaction.

For now the key ESZ5 areas I have an eye on pre-FOMC are 1970s-1975s zone and 1918s-1915s zone, and while in between these areas ESZ5 and the indexes will be in wait mode for FOMC rate decision.

Post FOMC the only chance of follow through to new ATHs is once/if a Daily close above 2032s/33s. A rejection of 2032s/33s or if macro lower highs begin to form below 2032s/33s my macro bias will favor a real correction of 10% or more which will occur in the coming weeks and will also occur during regular trading sessions rather than as a pre-market short-lived flash crash.

If no Daily close above 2032s/33s post the FOMC rate hike decision I will be looking for a Monday pre-market flash crash low test followed by an October low test as well once if below the 1860s-1850s support zone.

ES/S&P500 emini Futures still has a Daily -3Sigma target below -1800 but (and of course) there will definitely be potential for that to change if EZU5 turns to full bull mode post FOMC rate hike decision.

Ethan Premock

Futures & Options Strategist
Hamzei Analytics, LLC

Index #ES_F #SPY Bias Update and Levels for Monday, August 24, 2015

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On Friday I mentioned that I was thinking a zig zag corrective pattern would be achieved to 1958s for ESU5 sometime this week. I definitely did not think ESU5 would be trading well below 1958 or anywhere at/near the 1900 handle before the cash open Monday morning. However over the past several weeks if I did not say it once I said it 100 times that the day is nearing for the “reality” that US stocks cannot go up forever on the heels of a dovish Fed and the “bad economic data is good for stocks” era.

I now expect all the investors and traders who ignored the fundamentals of both US and Global economic data while the US stock market went straight up since the hope of QE3 back in mid-2012 will now be the ones who tweet or post on blogs the future fundamentals of companies like AAPL, FB, AMZN, TSLA, GPRO, and many others in hope that their stock positions will at least return back to their entry price to get out.

I also expect all the CNBC guest over the past few years who have been piggy backing off a dovish Fed will now be the same who go on TV and say “all signs where there for a crash due to the artificial environment the Fed and central banks created”.

Unfortunately for those who became investors or traders post 2011 where brain washed and trained US stocks will never correct again and investing/trading is like taking candy from a baby; these will be the first to go and out of the bizz followed by at least 50% of the “BTD” chat rooms as well.

Below is an ES chart I posted on twitter during the last week of 2014 in which I mentioned (and have done so many times since then) the profile since the announcement of QE3 is a very thin profile above a macro balanced area compared to the rallies just before the dot.com and housing/financial crisis bubble bursts. This means that when the time comes (which could be now) the drop from the QE3 and/or central bank bubble burst is likely to be much deeper than the previous two bubbles.

During both the dot.com and housing/financial crisis bubbles each formed a macro lower high (red arrows) before their big macro drop/flush. This central back bubble burst is likely to be no different and if so the scenario I am will be looking for is if ESU5 does not have a daily or weekly close above 1958s this week with 2020s as final or line in the sand for the bears I will expect the October low to get breached. If so ES will likely head to the low volume area at mid-1700s where it will bounce and should retest the October low as resistance. If the October low holds as resistance ES will form a macro lower high before heading to the macro balanced area at 1600s/1500s.

Ethan Premock

Futures & Options Strategist
Hamzei Analytics, LLC

Index #ES_F #SPY #NQ_F #QQQ #IWM Bias Update and Levels for Wednesday, August 19, 2015

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ESU5 SPY S&P500 went from several weeks of a lower high formation to a macro wedge this week within the 2015 eight month boring range and did so on hope for no ¼ point rate hike in September due to more bad news out of China, Oil making new lows this week, and the lowered guidance from Walmart yesterday.

However and even though breaching the lower high formation the reality of both US and global bearish divergences finally seems to be impacting the potential for new ATHs, which for me that confirmation is not coming from today’s (Aug 19^th) morning sell off but rather due to the fact ESU5 continues and has now failed at getting and holding above Daily center Sigma several times so far in the 2^nd half of 2015. New ATHs are now likely not to be seen unless a very dovish Fed appears (??).

I continue to find it extremely funny (in fact hilarious) at how the entire US stock market is solely and only dependent on a ¼ point rate hike in September (or not) now that 2015 earnings have failed to lead the S&P500 to new ATHs. Everyone knows a ¼ or even a ½ point rate hike after six years of zero interest rates will have little to no impact on the economy and/or any impact to the day to day/pay check to check person which is about 82% of Americans.

What a small rate hike will affect is the easy money the US stock market has made including all of the easy and artificial 800+ S&P500 points on the heels of the “bad is good for stocks” QE3 era. This tells me the other 18% of Americans who participate in investing/trading (including 401ks) could care less about the overall economy and is only concerned about the easy money coming to an end or not, otherwise the reality of global economies, global stock markets correcting, and low oil prices would already have the S&P500 well into a long overdue correction from extremely (and artificial) overbought conditions.

QE3 was nothing more than a way to artificially inflate assets for the “wealth effect” through 401ks which now has the US stock market addicted to the Fed. The “wealth effect” has been so important ever since unemployment hit +9% that I will be willing to bet the government would not waste five years and waste resources to blame a “flash crash” on one trader if a “flash crash” now happened in the opposite direction and was a “flash melt up” for an even better “wealth effect”.

For now the S&P500 remains out of reality due to its Fed addiction but the reality is “reality will catch up” one day just like when realty returned after every American became an expert real estate investor overnight back in 2004-2008. This does not mean stocks like AAPL, FB, TSLA, NFLX, GPRO, DIS, and even TWTR do not have a fundamental “Growth” story and future; it just means these stocks will correct technically regardless of fundamentals when the overall market corrects which is definitely not a matter of “if” and only a matter of “when” reality returns to US stocks.

For the remainder of the week or post Fed minutes I will have an eye on 2088s-2094s zone and 2061s/60s for ESU5, for IWM 121.30 and 118, for NQU5 4546s and 4471s/70s, and for AAPL (a huge market leader) 116.60 and 114.45 then 112.

Ethan Premock

Futures & Options Strategist
Hamzei Analytics, LLC

Index #ES_F #SPY #NQ_F #QQQ #IWM Bias Update and Levels for Friday, August 14, 2015

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ESU5 Daily center Sigma is now at 2091s and until a daily close above the Daily center Sigma and also a close above the key resistance zone I mentioned yesterday at 2096s-2098s the lower high formation remains intact. However yesterday I also mentioned 2074s as a key support and if defended the bull case from Wednesday’s reversal rally will likely or should be confirmed.

Buyers did protect 2074s yesterday during RTH but then failed to reach and close above Daily center Sigma which was at 2093s at yesterday’s cash open. Today I will be looking for the same but today’s support I am eyeing is at 2070s/69s unless the Bulls and/or RTH BTDers succeed in getting ESU5 back in value/+2078s; if so the zone which must get breached in order to head towards Daily center Sigma is 2083s-2085s.

If below 2070s/69s before higher the final or line in sand (LIS) for the bulls to defend is 2061s otherwise Wednesday’s rally will be negated and the lower high formation will most likely continue with follow through heading into next week.

Today’s lower high formation threshold for IWM is at 120.75-121.35 zone with a new lower target at 117.40s now that the previous 118s target was reached this week. For NQUS the lower high formation threshold is at 4545s/4546s.

Ethan Premock

Futures & Options Strategist

Hamzei Analytics, LLC

Index #ES_F #SPY #NQ_F #QQQ #IWM Bias Update and Levels for Thursday, August 13, 2015

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Today will be all about confirmation to confirm yesterday’s ESU5 rally or if yesterday’s rally will just be a one day event. The ideal scenario for the bull case is a “back test” to value; either a back test to last week’s value area low (VAL) at 2074s or to yesterday’s VAH at 2071s or both. If so and if value holds the bull case will likely be confirmed; however the overnight (OVN) high for ESU5 is exactly Daily center Sigma (yellow) at 2093s and until a daily close above Daily center Sigma the lower high formation I have been mentioning for several weeks will have chance to remain intact.

If ESU5 does get above 2093s today the line in sand (LIS) to keep the lower formation continuing again this week is at 2096s-2098s zone and if reached ESU5 will then have to reverse and close back below Daily center Sigma to avoid the potential of back to the slow, low volume, and chop & grind climb back to new ATHs.

For IWM today’s threshold to remain in the lower high formation is at 121.75-122.10 zone and for NQU5 the threshold is at 4570-4588 zone.

Ethan Premock

Futures & Options Strategist
Hamzei Analytics, LLC

Index #ES_F #SPY #NQ_F #QQQ #IWM Bias Update and Levels for Tuesday, August 11, 2015

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Indexes remain in the lower high formation even after yesterday’s extremely low volume rally which for now volume is definitely confirming yesterday was just a Short covering relief rally on the heels of another Greece headline along with help from AAPL trading above last’s value area +116.85.

Not only did ESU5 perfectly form a lower high right at the current downtrend line but the lower high was also formed at Daily center Sigma which will be key for the bulls to regain including also breaching and holding above 2105s as well in order to avoid the lower high formation continuing again this week.

With many individual stocks, sectors, and world stock markets already in correction mode I honestly cannot explain how the S&P500 is still holding within the range of the past eight months other than holding range due to the Yellen Put and/or hope of dovish Fed actions especially now that earnings have failed to lead the S&P500 to new ATHs. However one thing I do know is without volume or a catalyst to equal high volume to new ATHs any new ATHs on low volume will likely just be a repeat of all of 2015 which means new highs will again be short-lived during the topping process.

For today IWM must first regain 123 to negate the lower high formation otherwise 118s is the next lower target, ESU5 must first regain 2096s-2098s zone, and NQU5 must first regain 4586s/87s.  

Ethan Premock

Futures & Options Strategist
Hamzei Analytics, LLC

Index #ES_F #SPY #NQ_F #QQQ #IWM Bias Update and Levels for Thursday, August 6, 2015

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As bullish as the market felt yesterday after the pre-market ramp following the lite ADP report indexes remain in a lower high formation especially TF/IWM. Earnings were supposed to be the catalyst sending the S&P500 back to making new ATHs but so far the price action in most stocks after reporting earnings has been poor even after an initial earnings rally/pop that fades like in NFLX GOOGL FB & AMZN while almost all other stocks are not getting any type of an earnings rally.

At this point and now that most earnings guidance and most earning reports are not justifying higher stock prices the market is no doubt in some sort of hope that economic data does not improve (pre-market ramp post ADP confirms) so that the Fed remains dovish about a rate hike in the near future in order to keep the easy money in stocks flowing for a fourth straight year in a row. Reminds me of when household incomes did not support the mortgages on stated income loans back in 2004-2008; reality always catches up at some point!!

For ESU5 I continue to watch the 2104s-2108s zone to contain upside for the lower high formation to remain. If so ESU5 must then first get below 2081s-2077s zone then get below 2070 for definite confirmation that the lower high formation is likely to continue today and possibly post NFP tomorrow.

For IWM 125 is still key to remain in the lower high formation and for NQU5 the lower high thresholds for today are at 4618 and 4636.

Ethan Premock

Futures & Options Strategist
Hamzei Analytics, LLC

Index #ES_F #SPY #NQ_F #QQQ #IWM Bias Update and Levels for Tuesday, August 4, 2015

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So far the index overnight (OVN) session is still keeping the macro lower high formation intact that was mentioned yesterday which did also play a big role in my Short bias in ESU5 yesterday as well, along with confirmation from bearish divergences in AAPL, Oil/CLU5, and financials. However and once again the bulls found a way to defend an ESU5 bearish close at 2081s which forced Shorts to cover into the closing bell.

If below value/-2084 today I will expect a definite retest of 2081s and if holding again today the bulls could or may avoid further downside for the rest of the week (??) but as long as below 2097s/98s and definitely if holding below 2094s/95s the lower high formation will likely continue lower to today’s first lower target at 2078s/77s then 2071s/70s.

For IWM the first threshold which will need to hold is 123.30 then 124.80 in order to stay in the lower high formation today. For NQU5 the lower high thresholds are at 4614s/15s and then 4645s/46s. 

Ethan Premock

Futures & Options Strategist
Hamzei Analytics, LLC