Chart of the Day: $ES_F

I like to look at long term charts because it gives a big picture view.  The patterns start on a small picture and slowly get larger.  I have a tendency to assume that a chart has happened before.   On a shorter term chart, there are more chances.  On a longer term chart that assumption is often a mistake.  The latest example is of a daily chart of the front month e-mini S&P 500 chart (ES #F).   We got a close outside a Bolinger Band, according to my charts (I use e-signal) this is has never happened before.  It has happened to the downside but never to the upside.  Please note that I do not use traditional BB settings.  The reason it is hard to close outside is because not very often is a whole market aggressive on an extreme, at least not the same way.  The day it violated was the same day we first took out highs of the year when it was 1216.75.

So what does it mean when we break out of volatility on a long term chart?  Quite frankly it means someone got fucked.  It forces people from “want to” to “have to”.  On a shorter time frame when this happens the market reverses.  That is a very simple explanation.  So why am I now just pointing this out.  I will be completely honest I did not notice it till last night.  I was more focused on a daily close below the 20 MA.  We have not seen the market below it since earlier September.  So what does this all mean?  It means that we have some people back in a corner.  Like a caged animal it is hard to say what is going to happen.  Is this the end of the world?  Who knows, it is has never happened before.   I believe rallies heal everything.  Was it the fools who bought the HOY, time will tell.  I do think some are scrambling right now.  We need people to be short to move the market higher just like we need people long to move the market lower.  We have gaps below.  In case you are wondering I still think Curtis Faiths comments were irresponsible, even if he is proven right.

Update:  A close above the BB also occurred on 3/16 /2000.

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  • Cal

    Whats the significance of the gaps below Eli?

    • Eli Radke

      The market tends to trade back to fill the gaps. This makes the market “balanced”. The problem with trading for gaps is that it could take 2 minutes or 2 years.

    • For a market to be “balanced” all prices must be traded. The market has a tendency to find those gaps. You just do not know when. It could be 2 minutes or 2 years.

4 Responses to Chart of the Day: $ES_F

  1. […] This post was mentioned on Twitter by Eli Radke, Eli Radke and gaius marius, Trader Habits. Trader Habits said: Chart of the Day: $ES_F http://dlvr.it/8fST4 […]

  2. Cal says:

    Whats the significance of the gaps below Eli?

    • Eli Radke says:

      The market tends to trade back to fill the gaps. This makes the market “balanced”. The problem with trading for gaps is that it could take 2 minutes or 2 years.

    • Eradke says:

      For a market to be “balanced” all prices must be traded. The market has a tendency to find those gaps. You just do not know when. It could be 2 minutes or 2 years.

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