Trade Desk Client Note
Global Futures Market Review
Crunch Time For Equity Indices
Trend: Mixed Momentum: Mixed Sentiment: Mixed Daily Trading Range: High 35.90 (3.2%)
Daily Simple Moving Average Lines: Blue (20 SMA) Green (50 SMA) Orange (100 SMA) Red (200 SMA)
Technical Wave: Holding a mid-term sideways chop that has is testing the Jan 2011 opening prices. Overlapping and volatile price action is struggling to find fair value each day, outside of knee-jerk reactions to breaking headline news. Back to Dec 1998 closing prices for ES valuations.
TheLFB: ES 4-Hour Chart
Buy Support: Bullish traders will be looking to buy the short reversals to 1205 (the 38% Fibonacci retracement area of the move higher from 1070 to 1290), which could then target 1230 and 1250.
Sell Resistance: Bearish traders will be looking to sell any moves that fail to break the recent high around 1290, which could then target 1250 and possibly 1225 if financial outlooks remain cloudy.
Overall: With Q3 earnings season offering little in the way of strong forward guidance the daily volatility is likely to build as year-end approaches. There is nothing appealing about the technical aspect of these charts at the moment, either long or short, which reflect the fear of loss from unresolved debt issues in the EU and US. There will be a huge amount of volatility as headlines break each day regarding debt and restructuring levels.
This Week: Accept that news-headline related moves are dominating technical potential, and that the already high average daily trading range is likely to continue moving higher, creating further volatility. In 14 weeks the S&P 500 has made 14 consecutive moves up and down that each averaged 10%, on the back of a daily trading range of 3.3%. Danger signals are flashing, with most initial break-outs being quickly returned to their starting point. The fact that S&P500 values are back to Dec 1998 levels confirms that Buy-and Sell trumps Buy-and Hold.