S&P Futures Update for Dec 18, 2012

 

As mentioned in yesterday's blog - I believe the market got caught short on Friday and what we saw today I suspect was a combination of short covering and momentum traders piling on fueled by optimism of a deal on the fiscal cliff. All trends are UP. As I write my post the overnight session has taken out last week's high which was a poor high. The key reference for tomorrow is the Spike

1. A price opening below an upward spike would be considered negative since the late day price probe or spike was rejected leaving a selling tail.
2. Opening within a spike shows price acceptance and keeps the rally in tact;
3. Opening and trading above the spike reveals that price has not auctioned (probed) high enough to cut off the buying allowing for two-sided trade. The target becomes last weeks high at 1432.50.
4. The bottom of the spike at 1422.75 is  “support". Below that we should find support around the 1417 area which was the afternoon pullback low.

Friday's POC at 1409.50 was very prominent and was not visited prior to today's rally. I would carry that information forward as these prominent POC's are usually visited within a couple of days. A good example being the POC from 12/10 that was visited on 12/13.