Can Friday sustain the rally?

Thursday delivered what was expected, a nice narrow range light volume consolidation day. The Dow did set another record high today, but that was also not where I set my focus. 17 of the 30 Dow components finished the day red. The biggest banks and semiconductor stocks were red, yes many in the sectors were green, but the BIGGIES were not which left both sectors red upon closing. The big stocks and two key sectors can’t follow for long. They are the leaders and put in inside narrow range red days today.

Crude closed up 62 cents at $60.03. Rumors out of the Algerian Press surfaced about OPEC moving the scheduled December meeting up to October 18-19 to discuss production cuts. Cut in production, even with the current supply would pressure the price and would require careful monitoring to insure no shortage incurs to then press prices back near $80. Gold also up today $8.80 to close at $575.50, a much needed bounce after four consecutive down sessions.

After hours news was more negative than positive tone. Giving reason to be cautious going into Friday. Look for movement early on futures ahead of the 8:30 am data then for a pullback upon the opening. Every dip has been bought this week, so keep in mind the bulls need to rest and Friday’s can be reason to do that. Volume should be good tomorrow and outpace Thursday.

ES (S&P 500 e-mini) Prior weeks data: H= 1350.50, L=1321.50 and C=1345.50. Weekly pivot and support/resistance data: PP=1339.25, R1 1356.75, R2=1368.25 R3=1397.25 and S1=1327.75, S2=1310.25, S3=1281.25. Pivot for Friday is 1360.25. Support 1359.75, 1358, 1356.50, 1354.25, 1352.50, 1350.50, 1347.50. Resistance 1360.75, 1363.25, 1365.75, 1367.75, 1369.25. Futures were quiet and held a narrow range ahead of Friday’s jobs data which will bring our week to an end. The market still looks like one more push up can happen then we will be quite over extended and ready for a pullback. I am already finding it VERY difficult to buy up here and hold on for long. There isn’t reason to start top picking and we need one more move up for exhaustion to set in. I think the data maybe the catalyst to give us that move up and exhaust us to see some profit taking. Also to see the shorts squeezed out. 1365.75-1367.25 resistance is big and would be a good short term top to give us an exhaustive move and a pullback.

Below the 30 minute ES chart outlines the inverted head and shoulders and we met the measured price objective today. So as we open tomorrow keep in mind the next resistance up at 1365.75-1367.25.

The 60 minute chart shows how tight today was and how we sat under 1360 for most of the day before finally breaking to the upside. This was possibly positioning ahead of the job's data and even shorts covering that were watching this resistance ahead of data tomorrow.