Sunday, November 23, 2014

S&P Futures Update for Nov 24, 2014

The market is driving higher due to coordinated central bank news/actions. First it was the Bank of Japan, then the ECB and then China. This has trumped everything else - market structure, fundamentals etc. but we are not here to fight the central banks or blame the news. We just want to go along for the ride. This period from Nov - Mar is usually very bullish. It is a pattern we have seen for the last 5 years. With fewer than 25 trading days left in the year, barring any "black swan" events or news, it appears we are going to end the year with double digit returns for the S&P but then again anything can happen. The 2 charts below provide a longer term view of the market. The monthly shows a breakout above the 2014.50-2016.75 area. This area now acts as support.

The weekly shows a breakout above a large balance area.


Lets go to the Profiles next. Friday we gapped higher on news from China. Traders took advantage of higher prices to sell into the rally from the Open print. We 1-timeframed lower for 9 periods (30 min) - slow liquidation versus new money selling - Value was clearly higher and the market could not close the Gap at 2052.50. For Monday, my focus is on the Gap and the lower 3 day balance. Failure to fill the Gap keeps the market in balance or 1-timeframing higher.  Acceptance back within the 3-day balance is negative and brings the prominent POC (2050) from Thursday last week into focus. Below that we have support at 2035-38 - 3-day balance lows and weekly POCs.