It’s December!
It’s December — at least as far as the futures contracts are concerned — but it will take a few days for the technical analysis targets on this new front month to be refined. September (SPU) will not disappear until next Thursday.
SPU was still the front month on Globex for overnight trading. That will end this morning. Therefore, you must look at the e-minis to see where December (SPZ) is poised to open. Dec. e-minis were trading up 500 at 1521.50. Fair value for SPZ is 24 points.
Yesterday, new highs on the NYSE outpaced new lows by 169 to 35. Granted, much of that was due to the strength in the financials. But rarely does the market have significant problems if strength in the financials is maintained.
Even in the NASDAQ, while the selling was fierce, 23 stocks were up for every 17 that were down yesterday. The simple fact is we are entering a historically weak period — just after Labor Day. And if we get some capitulation to the downside, it may be the launchpad for the rally into the end of the year. Note: we are not expecting that to happen today. But what will help a rally is when we have more shorts enter the market.
Volatility continues to uptick, another good sign. Yesterday, we saw good volume — some 140,000 in the front and 70,000 in the back.
For SPZ on the upside, we have a key number at 1526.50, 1529.50, a critical at 1532, and then 1535. For this market to get out of trouble, we need to stay above 1526 and then 1532.
On the downside, we see support at 1518, 1515, a key at 1513.50, 1510.50, 1509 and a major area at 1506. The Morning Pivot is 1518 to 1521. (But take that with a grain of salt because we don’t have enough data on December yet)
NASDAQ has declined more than 7% from Friday’s Globex high. Intel
(
INTC |
Quote |
Chart |
News |
PowerRating) alone is down 12% for the week. At some point, bottom fishing will come in. The question is, does that mean it’s time to turn into a buyer? We think not. We are looking to continue to sell rallies until we have signs of capitulation.
December NASDAQ (NDZ) — settled at 3921, minus 143.50. Currently trading up 10 at 3931. We see support today between 3908 and 3897.50. Under that, 3860 to 3845 is critical. If the market breaks below this, the first limit comes into play at 3829.50. Below that zone, 3808 to 3793 is a big area.
That would equate pretty closely with 3678 on the cash — which is a 75% retracement of the move from 3521 to 4147. Resistance is between 3958 and 3965. Above that, 3988 to 4005 comes into play. Do not expect 4000 to have the same psychological impact in NDZ as it did in NDU.
Above this, 4020-4025 is a critical area. If we can hold above this, it will take some of the short-term pressure off and possibly lead to some short-covering that may take us all the way up to 4100. Along the way, 4060 and 4080-4085 are key areas.
The Dow traded over 11,400 in the cash yesterday — oh, so briefly — before faltering into the close. But it still recorded its highest settlement since April. However, one very important note is that the market failed to take out the April high of 11,425.
Yesterday’s high was 11,401, and we closed at 11,310. This should register caution for Dow bulls. We continue to expect more of the same — sideways-to-up action in the index, fueled by the financials.