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Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he... More
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  • S & P - Nearing Resistance. Response Will Be Revealing. 0 comments
    Nov 29, 2011 2:43 AM

    Monday Evening  28 November 2011

     We have not written on our once favorite market in some time, so
    this will be a catch-up review.  As always, when analyzing a market,
    it is best to start with a higher time, for context, then work lower. 
    The monthly is first.

      There was climatic volume for the month of August, and the close
    was just above mid-range the bar, giving a slight edge to the buyers. 
    Whenever that combination exists, it can often delineate a trading
    range bound by the high and low of that bar, and that is what has
    developed, since August.  The rally in October, second bar from the
    end, was a wide-range bar up, but there has been no further upside
    for the current month, soon to close.  November's range has been
    small, so we cannot glean too much from it, at this point, for it is an
    inside bar with a likely lower close.

     Expect more sideways activity contained within the August range. 
    Does the weekly concur?

     S&P M 28 Nov 11

     So far, we would have to say yes.  The last important rally high,
    prior to the 2008 collapse, was 1441, followed by a weak retest
    rally to 1306 that led to the precipitous drop.  They form a band
    of resistance, marked by the two heavy horizontal lines.  A half-
    way retracement of that range is 1373, which is where price
    stopped in the first week of May, 2011.  The fact that price could
    not exceed that level tells us that sellers were in control, at that time.

     From the ensuing break and most recent rally, it is apparent that
    the 1300 level remains important, although it is not in jeopardy of
    being retested, for now.  1306, a touch higher, is the wide-range
    high from the monthly chart, adding to the validity of that resistance

     S&P W 28 Nov 11

     The daily is no surprise to be in a broad trading range, and right
    now, price is just about smack in the middle of the several month
    activity area, making direction a coin-toss for odds.  No edge there.

     A few more observations can be made from this time frame.  1208
    was a November low, and the 1209 bar, [following the circled closes]
    was the last high prior to the late November drop, last week.  We drew
    a horizontal line to show how that can be potential resistance for the
    current rally. 

     A 50% retracement of the most recent high to low range is 1214. 
    We circled the two day cluster of closes, just before price broke
    tentative support at 1208/1209, and those closes were at 1214,
    the half-way mark just mentioned.  Whenever a price area bunches
    up, it tends to offer greater support for declines or greater resistance
    for rallies, and the S&P is currently rallying.

     What may be key for this market is IF price can extend the present
    rally into the potential zone of resistance, how far into that zone,
    should  the market continue up, and then, note HOW price
    responds to it.  If price cannot reach that high, or acts poorly and
    immediately sells off, we will know to expect lower prices, perhaps
    retesting the lower portion of the August range. 

     Until that happens, there is no particular edge, either way, at this
    point in time.  Let the market declare its intent, then look for an edge
    to trade accordingly.

    S&P D 28 Nov 11

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