ES1!: Watch for the breakdown
With the ES1! trading around the 2,750 region, it is time to revisit and look for another set up. This time round we are looking at an ascending wedge formation with the apex coinciding with the 200-days moving average. Ascending wedges are by definition a bearish pattern while the 200-dma happens to coincide with a congestion zone between Nov to Dec. I know there is some hate in relation to moving averages but I personally feel there is some information value especially when taken in context with other forms of support/resistance.
Since I called for taking money off the table around the 2640's region, the ES1! has rocketed up another 100pts on diminishing odds of rate hikes, a second US government shutdown and higher Chinese tariffs. So what will be the bogey man this time round? I don't really know, but the whole backdrop of slower growth in the absence of tax cuts and global trade tensions just suggest buying at these levels appears to be misguided, especially with a debt refinancing wall round the corner. It is too simple to use traditional PE and PB ratios which would suggest valuations are cheap; These indicators are not adjusted for rates nor debt. Once adjusted, valuations remain elevated near the +1 standard deviation levels.
My preferred stance would be to position for a risk-off trade with an initial ABCD target of 2260.
Since I called for taking money off the table around the 2640's region, the ES1! has rocketed up another 100pts on diminishing odds of rate hikes, a second US government shutdown and higher Chinese tariffs. So what will be the bogey man this time round? I don't really know, but the whole backdrop of slower growth in the absence of tax cuts and global trade tensions just suggest buying at these levels appears to be misguided, especially with a debt refinancing wall round the corner. It is too simple to use traditional PE and PB ratios which would suggest valuations are cheap; These indicators are not adjusted for rates nor debt. Once adjusted, valuations remain elevated near the +1 standard deviation levels.
My preferred stance would be to position for a risk-off trade with an initial ABCD target of 2260.
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