This Would Confirm A Short-Term Top
The December S&P 500 and
Dow futures opened Monday’s session with small gaps to the upside,
mainly due to analyst upgrades and upped price targets in the Chip sector.
Broker selling off the open quickly closed the gap, and the reversal off of
Friday’s close ran out of gas just above the open print. The contract reversed
sharply through Friday’s low at 1,050, where it remained despite a few reversal
attempts off of S1 support at 1,046.50. A lackluster bond market close didn’t
provide any incentive to buy stock futures, resulting in the session low and S1
support being taken out. Some of the losses were pared into the equity close as
the ES
The December S&P 500 futures closed Monday’s
session with a loss of -4.25 points, and finished in the lower half of the daily
range. The December Dow futures closed the session with a 32 point loss, and
also finished in the lower half of its range. Volume in the ES and YM was
estimated at 495,000 and 42,000 contracts respectively, which was below Friday’s
pace and below the daily average. On a daily basis, both the ES and YM
confirmed Friday’s key reversal and cracked their 10-day MAs. A close below
their 20-day MAs at 1,043.25 and 9,755 would confirm that a short-term top has
been posted. The ES followed Friday’s YM move with its own break short on the
daily 3-Line Break chart. On an intraday basis, the 13-min chart provided
provided good resistance on both contracts, keeping the pressure on until the
30-min chart chipped in to break 1 bear flag and then close with a 2nd (see
chart).
Tuesday’s trade should be fairly quiet, given the
Veterans Day and bond market holiday.
Please feel free to email me with any questions
you might have, and have a great trading day on Tuesday!
Chris Curran
chrisc@tradingmarkets.com