5m SPX – 5 Day Trend Line Resistance (update 4)

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5m SPX – 5 Day Trend Line Resistance (update 3)

The TL resistance turned into support on 11/18.  Today in the S&P we saw a breakdown below support levels lasting an hour.  We entered a few positions during this intraday period of market weakness and anticipate strength through the rest of the day.

Looking for a hedge in the SDS or another good spot to get in the VIX.

 

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5m SPX – 5 Day Trend Line Resistance (update 2)

Support levels in the S&P holding. Bullish signal.

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Friday Update

The early morning weakness is an interesting pullback scenario.  It looks like it is giving room for more upward movement.  In the pit the consensus is that options expiration week will end in a bullish trend so we are watching for that. Seeing support at these low morning levels.

Holding VIX through the day but took profits on the SDS this morning.

Thursday Update

  • Metals are up after their pullback due to increased margin requirements.
  • Yields are up causing a drop in Treasury prices across the board.
  • Looking for a possible retracement back to the broken TL on the S&P 5m chart here.

Took some profits on the gap up in the opening, got out of $USD on weakness, started a position in SDS on market strength to protect profits still on the table.  We feel bullish today on a pullback that does not break support levels on the SPX 5m chart posted above.  Will continue to take profits into strength.

Emini Daily Consolidation (update)

At 5p PST the Emini broke out of yesterday’s tight consolidation.  This is the bullish signal for today we have been looking for.

 

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5m SPX – 5 Day Trend Line Resistance (update 1)

There is still validity in the upward TL on the 5m chart.

Today ended showing:

  1. Divergence between the stochastic pullback and the tight consolidation of the market.
  2. S&P stochastics ending the day in a falling wedge pattern.
  3. A gap between the S&P and multi-day resistance TL

These are 3 bullish technical indicators.  Looking for 1185 and up this week in the S&P to unwind some positions before further downside, or until this TL is broken.

Divergence involves a pulling back of the stochastic indicator (at the bottom fullK and fullD pulling back to oversold), and the price level on the chart (holding a consolidation, or moving up).  Click here to show divergences drawn on the chart.

It is always necessary to look at other time frames.  Here’s a look at the daily S&P chart.  The 5m chart has the TL extended to a ray on the right which continues on the daily chart.  We expect a convergence to the ray during this week – timing uncertain.

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NOTE: This is only technical analysis.  Reports, news, and other fundamentals should always be considered when making trade decisions.

Wednesday Update

Not looking for new positions today.  Slow market opening and volume could be due to the Vegas trade show.  The pullback yesterday might leave room for a move up so we are looking to take profits.  A couple areas of interest:

1) Gold and Silver had their margin requirements raised causing a drop in price while the market was moving up last week. The CME had a further raise again this week. Looking for an entry in the next couple weeks.

2) Researching the TLT – SPY spread trade.

Treasurys Update

The Fed is buying Treasurys every day this week.  It says it will also use cash from expiring mortgages to buy more Treasurys increasing total purchases from $600b to $900b.

From WSJ (“Bond Market Defies Fed”):

TUES: Fed buying 2- to 3-year notes

WED: Fed buying 8- to 10-year notes

There may  be a lag in price effect from the announcement date to the Fed purchasing date.  Watch the effect of Fed buying 2- to 3-year notes today and see if the price action is is repeated tomorrow in the 8- to 10-year notes; we are looking for a leading indicator for the 10-years.  Bond shorts should be weary of this decline being a pullback, then rally, and then a further pullback.  Always watch for the shake-and-bake and choose your exit in advance.

So far yields on 2-, 3-, 10-, and 30-year notes are down from yesterday but still up from last weeks levels (via yahoo bonds center).

Lots of action on the floor of the CME pit today. Pit population was gauged at 66% after 12pm EST. Heavy selling in the e-mini, 10-years selling off, dollar up.