Where do the US Stock Markets Go Now? Three weeks have now passed since the BREXIT vote and the markets should be settling down. The question is now, where are the markets going? Has volatility come out of the market? What is the future forecast?
Let’s start to look at the various instruments to gauge where the market stands. After the BREXIT vote, we were able to use the $ES Emini SP500 futures and the $VIX to determine the short term bottom. As a result, we will go back to those instruments and analyze them along with the $TF Russell futures which was used to determine when the markets had reached the “top” so far for the year.
First, let’s look at the $VIX. Below is the Daily chart provided by eSignal. The black horizontal line represents the weekly resistance. When price is below the weekly resistance, the long term view for the US Stock markets is bullish since the $VIX has an inverse relationship with the Stock markets.
The weekly and daily resistance is the same so that is an iMTF™ which is at 20.74. The daily support is 14.81. Right, we have stopped at this support. The question is will it hold?
Below is the 60m time frame for the $VIX. It has a support at 15.62 which is holding price from going down. However, price now has to go through a very thick could which means it is has a lot of resistances to conquer in order to get to 20.74.
With the thick cloud, probabilities are still high for price to go back to the support and try to break it.
Now, let’s examine the $TF Russell futures. We had used the Russell futures to determine the high point of the year (so far) since it was the lagging stock market index.
Below is the weekly chart. The resistance at 1182.50 is controlling the markets from going higher long term. This is when all the stock markets reached their high for the year and then reverse. Until this resistance is broken, the markets will consolidate until major support/resistances are broken. The major support is 1071.00.
Below is the 240m time frame. Price is at a critical support which is controlling the sentiment for the instrument. If the support is broken, price will change from a bullish sentiment to consolidation and will increase the probabilities for price to go to a bearish sentiment.
The major resistance at 1140.44 has to be broken in order to increase the probabilities of retesting the last high of 1160.
Below is the weekly chart of the $ES Emini Sp500 futures. We are at a major support of 2070.50. If this support breaks, the next support is 2051.00.
Below is the 240m time frame. The supports of the 240m match the weekly so they are iMTF™. If we are to retest the high and try to break it, this current support has to hold.
In summary, the US stock markets are a critical point today. Both the $ES and the $TF are at critical support along with the $VIX in the bullish zone. If these supports hold, the market will still have a high probability to retest the high again.
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