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Equity Indices Break The Ranges

News wires are quiet in regard to equity indices valuations, but earnings season could easily ignite another big move. TheLFB client notes have called for consolidation at support above 1325 on S&P 500, above 7300 on German Dax, and above 9680 on Japanese Nikkei.

A market alert was sent to clients recently indicating a move higher in global equity indices valuations was imminent, but that price action confirmation had not been seen. The break came on Tuesday with a move higher in S&P 500 and SPY trade. The signal to buy into the S&P 500 market (via Futures, ETF, or Options) came with the break of 1346, which targeted 1353 and 1360.

Five sessions of choppy sideways movement was recently seen on SPY trade, followed by a move higher that has now hit upside resistance at 136.00. Clients will be notified when price action breaks, and holds.  The main US ETF’s that track technology, energy, semi-conductors, financials, and emerging market sectors are all moving sideways, with little indication that a move long or short will soon be seen. The Russell 2000 futures contract (RUT) signaled a move higher in value from 846.00 that targeted 853, which quickly hit its target areas.

Sentiment towards the S&P 500 remains mixed as recent buy and sell moves are absorbed. Price action favors a consolidation in trade after a bout of selling was recently reversed. Caution is required with any positions held in equity indices trade as TheLFB trade desk is expecting the sideways crawl seen in May to continue, with upside break-outs facing strong resistance.

Price Action:
There was strong S&P 500 buying activity previously at 1330, which will now be a main area of support. There is a potential price reversal area of note at 1360 resistance. These swing point areas, where a new near-term trend forms and price action reverses previous trade direction, will be closely monitored and market alerts sent to subscribers as things develop.

The daily trading range on SPY is 13 points, which is above the historical norm and indicates that volatility is increasing, in low-volume markets. The 20-day Simple Moving Average (NYSE:SMA) on S&P 500 is @ 1336. SPY price action has a 36-month 75% correlation to crude oil moves, and a 90% correlation to the aussie (Aud/Usd) currency pair.

The detail below will help guide traders with analysis on intra-day price movement, trend, and momentum. Clients will note how regularly the Swing Point and Support or Resistance areas below are used each day.



Content taken from TheLFB Trade Plans

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