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E Mini Price Action Post China, ECB Stimulus To Focus On Higher Low Patterns For Continued Upside

Emini S&P Outlook Week of 11/23/14

Key Economic Releases this Week

Eco Calendar 112314

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The Dec E Mini S&P turbo boosted spike to the 2070 record high this week seemed predicated on the notion that bad news may bring out the best in equity markets, at least for the time being. The interest rate cut by the Chinese Central Bank & the latest ECB comments suggesting renewed dovish monetary strategies appear to be setting anticipation for the results of this latest action (global stimulus) & reaction parry (Is this going to be enough to keep global economies supporting social programs and expectations for improving living standards in the global regions most able to contribute to the upside of the world's economic picture?)

This question should be a foundation for many of the economic & political theorists going into the end of the year. Should expectations of a Pan Asian & European led round of monetary & trade stimulus come about, the tailwind supporting equity prices at these levels may become lessened if global investors do not see these resources trickle down into an economic environment of innovation support and easing of government controls. The next level of uncertainty, and this may be one that Central Banks & Governments have a harder time confronting, will be the notion that all of this stimulus will result into policies & a economic landscape that can achieve a balanced stance of policy makers & economic/business contributors & innovators.

Taking a technical look at the Dec E Mini S&P, the daily chart suggests that the market could be vulnerable to a "Buy the Rumor, Sell the Fact" pullback after the ECB announces its new round of asset purchase strategies. This could result in a somewhat tempered pullback, allowing for support levels to set up at the 2051.50 & 2048.00 levels. A close at or just below the 2048.00 level, may result in continued downside testing to a strong support level of 2042.25. Option volume in the 2040 calls appears likely to keep downside pressure limited to this range, with unexpected pickups in downward momentum limited to the 2038.00 level.

Continued momentum to test the 2082.00 initial upside target in the Dec E Mini contract may be tied to the development of strong price action, at the 2053.50. If this price range becomes significant & holds as a support level, the result could be a retest of the record highs, then moving to test the 2077.00 level before potentially reaching 2082.00. This notion appears supported by a Fibonacci measurement & Middle Keltner Channel intersection from October 21st (See Chart Below).
Happy Thanksgiving to you all. Be aware of any early closes & volatility from decreased holiday trading volumes.

S&P daily 112314

Chart courtesy of Open E Cry (A division of Gain Financial LLC)
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