This is almost too easy for them. A few off-hand comments from the Fed, a quickly-debunked oil rumor, some bad economic data (remember bad news is good news) a little slump in the US dollar, and poof… the market rockets up and recovers all of the losses of the past week. Dump, pump, and dump again. Rinse and repeat.

The SP500 mini futures (ES) closed at 2099.75 yesterday, just one tick below the strategic 2100 level and 26 points above the previous close. Gold also advanced strongly in response to … well, nothing really.

The ES gapped up in the pre-market and at the open after Stanley Fischer, the vice chairman of the Federal Reserve, said the feds see no rate hike until inflation returns to normal levels … i.e. not in September. But the ES then fell into a very narrow sideways range right into the close. The futures closed at the top range, but the total volume was less than 30% of Friday’s volume. Most of the movement occurred outside of regular trading hours when volume was minimal.

All in all, a very suspicious rally, with nothing much to support it and an obvious intention to move the market up away from the 200-day moving average. It worked for now. But it won’t work forever.

Today

Today we need to see some decent follow-through on this volumeless rally. If we don’t get it, and especially if we continue to have weak momentum and weak volume, the price is likely to pull back down to fill yesterday’s gap in the next few days.

Alternatively, if the price holds above 2093.75 in overnight trading a continuation high move could be seen first. It may last until the ES finds its major resistance during regular trading hours. At that point there should be some retracement.

Eventually the ES has to make its decision on which direction it wants to go. A break above 2110 level can lead the futures back up to the 2123.50-2125 zone. A move below 2062 can lead ES to drop to the 2050-35 zone. A big whipsaw move is likely today.

Major support levels for Tuesday: 2054-55, 2035-32, 2025-23.50, 2018.50-16.50;
major resistance levels: 2128.50-29.50, 2134.50-36.50 and none

 

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Chart: S&P500 mini-futures (ESU5) August 10, 2015

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