The Fed announced plans to purchase $600 billion of longer-term Treasury notes by mid-2011 at the FOMC meeting Wednesday. Interest rates were not changed, and will remain at rock-bottom levels for an extended period of time. ES sold off briefly, but moved back up to close near the high of the day..
There seems to be more optimism about stocks. Although NYSE market breadth indicators showed the upside momentum is waning, the price still moves higher.
Based on the daily chart, we still need to see a thrust move around Nov. 8 to end this uptrend move. Without seeing a thrust move, we can’t really identify which one is a true reversal sign. The price is still a little bit away from the full measurement from inverted H&S pattern breakout. But the current price is not too far away from that final destination 1222-1245 range.
TRADING STRATEGY FOR Nov 4, 2010
On the 60min chart, ES first sold off on the news and found the support line around 1180 area. Today if 1190-89 range holds overnight, ES still wants to try to fill the 1198.50 gap or make a new high up to 1203-05.50 range (short entry). A move below 1186.00 could start a shakeout move and push price down to 1176-75 area (long entry) and make a stress test for the Bulls.
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ESZ0 Intraday – 60-minute bars
