ES Pullback to 1280 Looms

ES is overbought and a pullback to the 1280 range is likely. But I believe this is a dip to be bought and that most likely ES is headed over 1373.5

The stock market rally from mid December up until now is overextended and appears to be topping just above the 1373.5 downtrend line. I believe a pullback is overdue and possible in the next few days to a week. ES has support at about 1285 (20 day moving average), 1280 (H&S Neckline and 1147.5 uptrend). The pullback could drop ES briefly below the 200 day moving average but overall I believe ES should stay above the 1068 uptrend line.

I believe that whenever ES pulls back that it will be a dip to be bought. My reasoning is that the rate of descent defined by the 1373.5 downtrend line is low (60 points in 7-8 months). This is not a strong downtrend anymore. I think buying ES on a dip at or below the 1280 range should be good for a rally back to 1300 at the very least and there is tremendous potential for further upside (possibly above 1373.5).

In the worst case situation ES will continue to trade sideways in a large 1350-1250 range. But even in this case I still believe ES is at least a good short term buy when it dips below 1280.

I just got back from vacation and need a few days to get myself back into day trading mode. But I am looking at getting short ES today and holding it for a few days to see if the pullback materializes. I’ll try to keep you posted if I take this trade.