This feels like a hope-for-the-best market: Hope the winning party in the election will bring in changes in the economic climate. Hope QE2 will create more jobs and bring more prosperity. Hope is not a good trading strategy.
ES continues to chew off the strength of the price support from 9-day moving average line. So far the bulls are successful in holding the price above that line, and have frustrated many aggressive sellers. Today will likely be one more day like yesterday, a back-and-forth struggle until one side gives up on Wednesday.
Today is Election Day and tomorrow is the QE2 announcement. We are also approaching CIT day, which suggests that a volatile move is waiting ahead of us. If today ES can breakout yesterday’s high 1193 area, the final push could take the price up to 1218.75 or higher to the 1230 area.
If we see a break below 1165, the market will attempt to go down to the 1150-1155 range, but that attempt may not be successful. However it would hint that a correction target around 1125 may be on the way soon.
ESZ0 Daily chart
For Tuesday:
On the 60min chart, ES gapped up strongly at open in keeping with the common fallacy that the first day of month must be in the green. After the 10am economic reports, ES started to reverse and gave up most of gain made in early morning. An hour before the close it moved up and closed at the middle of trading range.
Today 1186.50 is the intraday trading key line. A move above it could push the price back up to 1188.50-89.50 or higher to 1192-93 area (short entry) to challenge last week’s high area again. If we fail to breakout 1186.50 during overnight trading, ES could pull back down to 1178-77 area or lower to 1169.50-65.50 range (long entry) to complete yesterday’s daily range breakdown move. But later if ES fails to move back up above 1179-80.50 before the open it will be the first bearish sign.
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ESZ0 Intraday – 60-minute bars
