ES steadily sold off until 3 pm yesterday, then bounced sharply from the 9-period moving average line — exactly at the position buy we posted 12 hours before the market opened — and closed virtually flat for the day. This self-correction smoothed out the overbought condition again and brings the short timeframe into neutral territory again.
Today we have CPI and PPI reports, and option expiration day. It could bring high volatility back to the market again. In addition news of the spreading mortgage foreclosure scandal will haunt the banking sector, despite self-serving statements from the CEO of Bank of America that the problem will be solved soon. What else could he say?
However the main focus this morning (Friday) is a speech by the chairman of the Federal Reserve. His remarks are scheduled for 8:15 a.m., before the market opens but while Globex is still actively trading, and they could send the price bouncing as high as 1192, or as low as the 1153-52 range.
The market will be watching for anything to confirm expectations of further “quantitative easing” — a euphemism for flooding the economy with more imaginary money, while the U.S. dollar continues to tank. QE2 is effectively priced into the market and widely expected at the November FOMC meeting, even as it becomes more and more obvious that it won’t help the majority of Americans. It will help Wall Street, where they are getting ready to carve up $144 billion in bonus money, the biggest pot in history.
ESZ0 Daily chart
ESZ0 intrady – 60-minute bars
Nat’s position calls for Thursday — available to members 12 hours before the market opened — were pretty amazing. Her overnight position sell was exactly at the high for the Globex session; her regular session position buy was 1 tick about the low for the day.
To see more of Nat’s market analysis, visit www.naturus.com. Free registration required.
