Hi Shoppers,

The market has had quite the move.

I wrote this up on Sunday:

Here is the Emini S&P 500 Futures December Contract (TIcker: ESZ2023):

The head and shoulders top was completed when ES closed below the neckline at $4414.50.

The target price of the head and shoulders formation is the difference of the high of the head less the neckline and then subtracted from the neckline.

It may not always trade that low.

Another target level is the difference of the shoulder high less the neckline and subtracted from the neckline.

In this case it is 4597.50 – 4414.50 = 183 then 4414.50 – 183 = 4231.50.

The low last week on October 4th was $4235.50.

That is only a four point difference from the formula.

Does that mean we have reached the lows?

It is quite possible.

Looking at the pitchfork, we had a bear trap as the ES closed below the median line for two days on Wednesday and Thursday.

Only to have a major reversal on Friday closing above the median line, which is also a bullish signal.

The next level of resistance will be the neckline at $4414.50 and support comes in at the median line $4299.50 or the nice rounded price of $4300.

Now check out what has happened since:

ES literally traded right up to that resistance level, $4419 was the high yesterday, before pulling back to close a bit lower.

Now we need to watch for it to close above $4414.50 or rollover for a pullback.

Thanks for Reading … See You Next Tuesday,

Licia Leslie