What is the controlling time frame for the US Stock market?

What is the controlling time frame for the US Stock market?   What does that mean?

For all instruments, the support/resistances are “respected” on a single time frame for a period of time.    If you can determine this time frame, you can forecast that instrument.     The problem with this theory is that it is occurs for a limited time.   No one can predict how long the support/resistances are respected for that time frame.   Therefore, you have to go with the philosophy of it working until proven otherwise.

Let’s look at at the US Stock markets as an example.    All around the world, institutions evaluate the US Stock market with the E-mini SP500 futures.   Even though the Nasdaq is leading all the markets, the SP500 has more stocks and gives a better perspective on the market in general.    This is there thoughts…not MINE!

Here is the E-Mini SP500 Daily chart provided by ThinkorSwim .  Examining the chart, it is consolidating around 2053.75 and 2099.75.   Right now, we are at the support so one of two things can happen.    Either it will break it and start to head towards the “cloud” or it will bounce off it trying to go back to the resistance.     So….what will happen?    How do you see if it will break the support or bounce off it?

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Let’s see if we can answer this question by looking at the lower time frame right below the Daily.  The lower time frame is the 240 minute.   Here is the chart:

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In examining this chart, the resistance holding this instrument down is 2067.75.   If it breaks this resistance then we have a high probability of getting to the major resistance of 2099.75.

The support at 2046.25 is stopping the instrument from starting a bearish trend.      If this is broken then we have a high probability of getting to the major support of 2000.

Based on this analysis, the 4 hour time frame is controlling what is going to happen.  How long will this last?   No one knows.   We will keep on doing this analysis on the 4h to forecast the market and look at the probabilities until the support/resistances are respected on another time frame.

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About the Author Manesh Patel