Chicagostock Trading

Chicagostock Trading

SP500 January 2018 Mirrors January 2016


The SP500 started this year, zooming through last year's high and charging up to 2800.  This 2800 level is the 6 month volatility window in which 5 daily closes above established a bullish 6 month bias, forcing buyers to buy the breakout. The bias was established on January 24th, when the market completed its Cup/Handle target created on January 17th, after recovering its prior high of 280850 based off the January 16th low of 276925.  The market expanded this Cup/Handle up to 2846, seeing 2 days of consolidation, before expanding higher on Friday January 26th.  The breakout over the prior ATH of 2855 lured in new buyers, in which were caught when the market fell back under fell back under the January 24th low of 282550.  Over the last 2 days, buyers have fought to defend this level, seeing the market fall back to its Cup/Handle breakout of 2810 in which buyers defended, however were unable to overcome 2840.  Today the cash market opened lower, leaving longs trapped above and forcing sellers to chase lower, giving way to fall back under 2810 and target sell stops below the January 16th low of 276925 that began the move up.  By falling under 2800, buyers who bought the breakout above are now on the hook as the market falls back to test its 6 month pivot of 2751.  Buyers will be forced to defend this level, to prevent further damage, however as the Midcaps are showing, a move below the 6 month reversal window of 2717 and 5 daily closes below, will reverse the 6 month bullish bias into a reversal bias, giving way to expand the range of 211 (2667-2878), down toward 2456, which retraces the market back to test its breakout from September.  Rallies back to 2800-2810 now offers new resistance as supply is caught above, for buyers to overcome and sellers to defend.  Buyers will need to squeeze shorts through the February high of 2837 in order to get another shot at the high.  Failure to overcome 2800-2810, leaves longs vulnerable to see a shakeout under the 6 month volatility window of 2717.

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Here Comes Santa Claus

Santa Claus came a week early to Wall Street with the SP500 breaking through 2665 on Friday.  As seen in the above chart, since the September low of 2485, the market expanded its rally into the November high of 2594 by 100% as it ran into 2665 earlier this month.  There was an initial break off the level that caused the market to fall into 2605 which was fueled by "fake news".  The market recovered off this low to make another run at 2665, before pulling into test 2620 as the November 29th low prior to seeing the break down to 2605.  This level held, trapping shorts below as buyers marched back to press against 2665.  The breakout seen this past Friday through 2665 has the market testing its 127.2% fib at 2694, with the 161.8% extension seen at 2732. Last week's 265175 low is now key for any downside shakeout/reversal.


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SP500's Trouble with 2665 and Thursday's Vol Windows Defined

On Thursday, the day after the FOMC statement, we review the intraday action in regards to Chicagostock's Volatility windows and pivots.  The highlighted blue box, is the cash market open, NYSE 930 AM.  After the open, the cash market had trouble overcoming the intraday pivots, seeing the range act as resistance.  This led the market to fall into the lower Vol window which was met with a defensive bounce.  The defensive bounce gave way for a retest of the open, giving sellers an area to defend and buyers major resistance to overcome.  For buyers that picked up the initial test of the lower Vol window, this provided a bounce to take some profits into.  Second or third attempt at the lower Vol window, increases the odds of seeing the level failing. After failing to overcome the opening range, the market drifted back toward the lower Vol window which was taken out. In order to establish a bearish intraday bias, a 5 minute hold below the lower Vol window needs to be seen.  Sometimes the market can establish a bias, and bounce back to the open to again force sellers to defend their intraday trend.  In this case, the second test of the lower Vol window saw the level taken out, establishing a bearish intraday bias.  Since there was already an early bounce off the lower Vol window, there was not another one and sellers expanded the market lower, forcing longs to liquidate into the close. 


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2623 & 2665

Right before Thanksgiving, there was one technical pattern that was yet to be completed, the inverted head/shoulder projecting 2626 seen here. When the market made new month lows on November 15th and recovered, this created a bear trap with a minor inverted head/shoulder pattern that completed the next day at 2587. After squeezing off the low and completing the small inverted head/shoulder, two new patterns developed.  The pullback into retesting the November low gave buyers an opportunity to defend the low, in turn creating a right shoulder for a larger inverted head/shoulder pattern, targeting 2623.  Inside of this right shoulder, a minor cup/handle formed, projecting a breakout over the neckline of 258950 to test 2600.  After pushing through 2590, the market overcame its last high made on November 16th, aka the "neckline", giving way to expand the larger inverted h/s pattern from 2589 up to 2623. It took 5 trading days to get to this objective on November 28th.  After running into 2623 and completing the inverted head/shoulder technical pattern, this is where the market became sloppy.  Buyers were not done. Buyers rushed into the market on November 30th in anticipation of the tax bill passing the senate, pushing the market to make a high of 265850. The next day after this high, news came out alleging President Trump ordering Flynn to contact Russia as a candidate, not as the President elect. Nonetheless the market flushed down to a low of 2605, before recovering to settle the market at 2644 and await the tax vote into the weekend. Over the weekend the senate managed to pass the tax bill, which saw Sunday's futures gap 10 higher on the open at 2654.  The higher open lured in new buyers, run into the 2665 100% Fibonacci extension where the lid was met and resisted, dropping the market back to Friday's settle of 2644. 

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Is This the Top?

Last week, we highlighted the inverted head/shoulder technical pattern that was created after the market made new lows for the month in November and caught new shorts on the hook.  This inverted head/shoulder pattern, gave room to expand the market above the neckline of 258950 up to 262350.  The target was met on November 28th, with the market hitting a high of 2627.  



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The Turkey Squeeze - T/A Galore: 2 Inverted Head/Shoulders and a Cup/Handle


 Last week, the market took out the early November low of 256225, falling into 255550, before quickly bouncing back to 257150.  This break of the monthly low turned into a failed breakdown and a head fake as the market retested 2562 into the end of day, creating a right shoulder for an inverted head/shoulder pattern.  Shorts below 2562 were left trapped, giving opportunity to expand the range up to 257150.  


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US Dollar Down 10%, Now What?


Since our last report on March 17th titled "Will President Trump Devalue the US Dollar?", the US dollar is down over 9%, falling from 100 down to a recent low of 90.79.  This does not mean a dollar devaluation has occurred, or will, however as we pointed out, there are risks out there that needed to be factored in, and the market is doing just that.  

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Cash Market Games

Sometimes most of the move is done in the overnight (Globex) session, and by the time the cash market opens and everyone is selling the weakness, the cash market holds to prevent these traders from getting paid. Interesting? Weird? This is what I call CASH MARKET GAMES.  Not only does a lower open lure in shorts, but when it pushes back to close on the highs, it sucks in new longs that need to get paid in the following session. Should the market open lower in the following session, those new buyers are on the hook and short sellers have to come back chasing lower. 

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595 Hits

The Bear Trap into Yellen's Short Squeeze


On Thursday of last week, the market sold down to a low of 240525, which successfully tested and held the June low.  Friday saw the market overcome the 3D pivot range resistance to reverse the negative momentum. This reversal allowed Monday and Tuesday's 3D pivots to turn into support.  Both days saw the market chop sideways into awaiting for Janet Yellen on Wednesday.  This in turn, creating a cup/handle pattern, with room to expand into 2449 on a break through 2427.  

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795 Hits

Is The Trump Trade Over?



When Trump took hold of Florida on election night, the SP500 futures sold off to a low of 2028, hitting its limit of 100 points to the downside.  The move, was reversed within the same day, seeing the market recover to push back to 2180 once the election was over and Trump was confirmed as the new President-elect.  The election of Trump, caught many off guard, however the market reversal also caught many off guard as a majority was looking for a sell off should Trump have been elected.  By taking the reversal of 2180-2030 of 150 points, this gave an upside objective of 2330.


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SP500-Tracking the Recent Correction, What Next?

Anyone old enough to remember the euphoric action on May 2, 2012 when Bin-Laden captured? $ES_F $SPY $SPX

— Chicagostock (@Chicagostock) March 2, 2017



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Will President Trump Devalue the US Dollar?

Before Mr. Ben Bernanke became Fed chairman, he made a speech before the national Economists Club in Washington, DC. on November 21, 2002, titled “Deflation: Making Sure "It" Doesn't Happen Here.” In these remarks, there were 5 major points Mr. Bernanke pointed out as tools the Fed could use to fight deflation:

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SP500's Consolidation


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2016 Top 5 Trends

In no particular order, here were the top 5 major market changing trends of 2016 identified by Chicagostock:

The stock market started 2016 weak, however recovered the highs of the year by summer, making a U turn. Those that were caught short, bearish, and wrong, were now forced to reverse position, thus creating the cup/handle formation, giving way to expand the U turn up to 20k.
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SP500's ride from 1800 to 2040 with Chicagostock




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How Oil Ripped the Face off Shorts

Let's take a look at how the oil short squeeze took place.  In February, oil broke the January low of 2756, falling to 2605 on February 11th.  Just as oil was testing and ready to break 26, the UAE Energy minister came out with remarks that they were willing to cooperate on production cuts.  This instantly reversed the market off the lows to see it recover 30 in the coming days.  Dubbing this the "OPEC put" as it clearly showed members of the organization were attempting to defend 26.  

The move, setup a failed breakdown, leaving shorts below 30 trapped:

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The Great Reset


In December’s article “The Yellen that Stole Christmas”, the point was to show how buyers in the SP500 were caught above 2040, and needed a Yellen rescue.  The market attempted to breakout to start December, however the rug was pulled from underneath as Yellen reiterated a rate hike later in the month.  After bluffing the market for 2 years on this rate cut, the call fell on many deaf ears.  So it was. Buyers were left caught at higher prices, betting on a “Santa Claus Rally” only to be hoping for Yellen to save Christmas.  For the first time in 6 years and exactly 3 years from December 2012’s FOMC that placed a 6.5% target on NFP for a decision on Fed Funds rate, the FOMC reset the market and hiked the Fed Funds rate by a quarter point.  Bulls did not get what they were looking for and saw the market fall back to retest 1982 support.  The level barely held on December 18th, as the market rallied back for Christmas holiday and the “Santa Claus Rally” was actually a gift from Yellen for stuck longs above 2040 to “breakeven”, or as we like to call it “get out of jail free card”.  

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The Yellen that Stole Christmas


When the FOMC decided to place a 6.5% target on NFP rates to justify raising the federal funds rate, the SP500 was trading 1427, gold 1718, US dollar 7985, and 30 year bonds at 148.  

“… the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent…” (FOMC 12/12/12 source).

Just days after this release, we highlighted the weakness in gold: Whats With Gold? FOMC Spooks Market. Double Top Eyes 1250.

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2300 Hits

Pre-FOMC Market Update



Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Video content hosted by third party.

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CST Pro May Trial

Excerpt from CST Pro subscription email sent on 04/27/15 for trade day 04/28/15.  As highlighted in the report, 209050 was a long trade with specific stop and target levels. Bottom left of image is excerpt from our chat, highlighting Chicagostock's intraday analysis, followed by a chart of the intraday Emini SP500 on 04/28/15.  

CST Pro Subscription- 2 Week Trial 

  • Daily Emini SP500 Futures Analysis
  • Daily pivots & vol windows (ES/CL/GC)
  • Volatility Windows PDF Guide
  • Swing trade recommendations
  • Live trading chatroom
  • Live charts
  • Live day trading signals 



For the month of May of 2015, we are offering a special 2 week trial period to CST Pro for only $99! This will gain you access to the daily letter, pivots, live day/swing trade signals, trading room, and screen share.  

This is an open offer to allow you the opportunity to try our group and see what we are about. Only serious traders apply. We have room for a maximum of 10 new traders. If you beleive you can find value in joining our group and services, please feel free to apply. See you soon and best of luck trading!

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