Yesterday

The S&P 500 mini-futures (ESM5) repeated Wednesday’s pattern yesterday, but it went a little further and made a more significant move.

The minis have been fooling around below the 2103-2105 level, stymied by the resistance in that area every time they tried to move higher. Yesterday (Thursday Apr. 23), they finally gathered enough strength to move past the resistance and make a significant new high for April. The ESM5 got as high as 2114.50 on the day – thereby filling a gap that has remained open since March 3 – before falling back a little to close at 2107.

In effect the ESM5 broke out, touched what will be new short-term resistance, and fell back to close above the previous resistance which, once broken, now becomes support, a very common pattern.

Today

Today the important question focuses on continuation or retreat. Can the ES make another new high today, or will it pause for a while before it takes a run at the 2115-2121 area that is the next major obstacle?

Based on the closing price-action Thursday, we aren’t likely to see a continuation move higher in the morning session, and if we do, it is probably a short-term fake. But we might see a genuine continuation in the afternoon, if institutional traders take a look at the action and decide to re-position themselves for what is probably the last chance for an upside move before the summer doldrums arrive. 

The volume increased yesterday on the upside move, and the durable goods report will be released in the morning. Today is expiration day for the weekly options with the heaviest activity around the 2100 strike (which suggests a closing price today around 2005).

There is a reasonable chance for a further move up today or Monday. If there isn’t – if the ES fails to follow through on this quasi-breakout – there is a chance it will slip back down again, and re-enter the consolidation zone where it has thrashed around for the past month or more.

ESM5 Daily Chart – Apr. 23, 2015

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