Dec 27th ESH2 Prep

Redbook at 7 am: How will traders discount this report? Bullish, bearish, or neutral?
Consumer Confidence at 9 am: What is the outcome of the report at 9:30 (an hour after U.S. Equity open and after having been digested by the market?
Closed above significant overhead resistance on Friday. Previous highs were 1249 (Wed’s high) and 1251 (Thur’s high); will these highs hold as support?
Where did we open in relation to last Friday’s close?
Major support is around 1237.50ish – we’ll want this to hold if the recent leg up is to sustain itself.
Will the upward sloping trendline continue to hold as support?

December 22, 2011 Market Analysis

December 20, 2011 Market Analysis

December 18, 2011 Market Analysis

Video Commentary

Fed Day

S&P 500

From a technical perspective, the S&P 500 (cash index shown above) found sellers at a significant downward sloping trend-line which has suppressed the bulls since the big drop in June. Tomorrow, the Fed will be announcing policy on the fed funds rate. With all the whipsaws and confusion that have been going on in the markets lately, it is hard to say what will happen next. Will Ben Bernanke add more fuel to the fire or blast the markets to the moon? Hopefully after tomorrow, the market will show its cards and give us a sense of direction...

EUR/USD

EUR/USD is exhibiting what could be a giant head-and-shoulders pattern. If the neckline is broken, we could see a significant spike in volatility. A measured target of the downside would be ~1.25... The instability of the Eurozone certainly aids this case.

S&P500

Failed Breakout

For the past week, most trading volume or "value" has been established above 1240 on the ES. A breakout to the upside and continuation of the uptrend seemed likely. Today however, a rally that would've started the next up-leg due to an IMF $600 billion lending program for the Eurozone [http://www.bloomberg.com/news/2011-12-07/u-s-stocks-gain-on-report-g-20-weighing-600-billion-imf-lending-program.html] was completely shut down. What's interesting is that the market may finally be reflecting the state of global economies: the recent "relief" rally was full of hot air; and the discounting of "good information" is becoming less effective. The chart above speaks volumes.

The markets have been chewing up and spitting everybody out with wipsaws, failed breakouts, etc. lately and it is driving even the most disciplined traders insane. The next breakout, whether it be to the up or downside will surely spike volatility.

SPX at Resistance

SPX has rallied to the midpoint of the previously broken symmetrical triangle pattern, the underside of a significant broken trendline, and traversed 78.6% of November's high to low. Another point of interest is the shooting star candlestick printed on Friday; the bears had a strong close. We're currently at a critical juncture of resistance. If the bears want to take us on a trip south, they'll need to take out support at ~1240 (12/1 low). I'd like to add that this may just be a consolidation period in the works; however, the Euro is forecasting something different...

The Euro further strengthens the bearish case. I find this chart most interesting.