Wednesday delivered another win for the bulls and volume came in again. Second consecutive accumulation day, while eight of the last ten days have closed higher, the market continues to run higher. The TRIN closed at .88, finally a bullish day to support the price action. The volatility (VIX) closed higher at 23.69 (+.27). Gold and oil closed at +13.90 (1020.20) and +1.58 (72.51) on the day.
The bulls continue to leave us thinking the shallow pullbacks are all we will ever get. However, as soon as everyone stops looking for it, we’ll get it. With volume piling in Tuesday and Wednesday we are seeing some chasing most likely and also a product of quadruple witching action. Volume typically increases throughout the week of expiration, particularly on quadruple witching over just double expirations.
Nas Composite, Nas 100, S&P 500, and the Dow all have a RSI of 71-74 and stochastics at 95-99, to go with those lofty levels is overshooting the upper Bollinger band. The sooner the market works off those bollingers the easier it will be move, we won’t have that serious chop and huge lull mid day that extends into late day to bore us to death. The market can pullback to work off this level or move in a narrow range sideways, everyone can hold their breath for that pullback! To go with the daily the 65 minute chart on each index the RSI is mid 80’s and stochastics mid 90’s. The final 65 minutes of the day left hanging man candle on each index. That of course needs confirmation ( don’t I say that every night lately and we have yet to get it) to pull the market back and find some reversal. If it doesn’t confirm we look for continuation to the upside.
Along with all the above, the ES, NQ and TF all have been forming ABC patterns on the 60 minute. For the ES the A leg started on 9/3 with a low at 987 and we’ve moved up from there. The chart below marks the A and B leg, the C leg’s up part is now to be watched for the pullback part to complete that pattern. IF we get that for symmetry the pullback could be 5-10 points and then either retest today’s high or put in a slightly lower high to reverse the action. That is what we watch going into Thursday. I wouldn’t want to watch this pattern if the ES moves another 5-7 points to the upside without that pullback. Otherwise the symmetry will be absent and that takes the steam out of the pattern for a move.
Economic data for the week (underlined means more likely to be a mkt mover): Thursday 8:30 Building Permits, 8:30 Unemployment Claims, 8:30 Housing Starts, 10:00 Philly Fed Manufacturing Index, 10:30 Natural Gas Storage, Friday nothing due out
Some earnings for the week (keep in mind companies can change last minute: Thursday pre market DFS, FDX, PIR, and after the bell PALM, TSCM. Friday nothing due.
ES (S&P 500 e-mini) Thursday’s pivot 1058.50, weekly pivot 1029.75. Intraday support: 1056.75, 1052.50, 1050.75 38.2%-1049.50, 1046 fills gap Resistance: 1063.50, 1071.25, 1074.75, 1086.25
