Wafting patiently for 1300 $ES_F $study

By : January 10, 2012 at 7:52 am

 

Around the Globe

    Asia - Trifecta
  • Shanghai (China) +2.69%
  • Hang Seng (Hong Kong) +0.73%
  • Nikkei (Japan)+0.38%

Europe as of 6:40am EDT

  • DAX (Germany) +2.49%
  • FTSE (UK) +1.13%

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Great news out of China in an upside surprise.  Markets are buoyed.  Light on USA news today.

Quote of the day:
When they discover the center of the universe, a lot of people will be disappointed to discover they are not it. – Bernard Bailey

 

Current Allocations:

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Performance so far this Month:

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Breadth:

 

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The bulls punched up a good score on Monday and now we will see if they can break that see-saw pattern we have been in since Dec 27.  A bullish score today should be given much respect as the numbers are stacked against them.   The bar is high today for the bulls.

 

$ESH12 chart:

 

We remain patient waiting for the arrival of price into the 1300 area before wanting to short.  We are eyeing that R3 level 1294.50 as a possible front run, but patience is key and how the market handles today’s gap will give us even more insight. There should be a decent amount of shorts stuck here and if that teams with some impatient side money we could get some more upside.  This may be the case where the early short does not get the worm, caution is advised.

 

On the long side we like still favor upside momentum and like the 1270 area for a buy into the market.  Today’s pivot area of 1273.50 is also of interest.

 

For now the momentum is on the side of the bulls with an upside breakout to new highs.  If they can hold and put in a 9:1 up volume today, than Wednesday’s market action will predict for us Thursday’s follow through.  Watch for a trend up or gap hold day to develop.  Day-traders (me) remain frustrated that gains are being made overnight and cash hours are used as consolidation.  Buy and hold, at least overnight is the winner today.

 

The Russell 2000 small caps and their relative weakness in breadth remain a concern along with the strength of TLT.  Once we see TLT give up the ghost (117) we will be convinced we are on a more sustainable bull run. 

 

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US Dollar

The behavior of the Dollar remains bullish with 81.75 area the upside resistance and 80.40 downside support.  We would expect to remain in the 80s and see some testing.  The dollar is not use to rallying with the markets so progress should be slow at best with plenty of backfilling.

 

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TLT

TLT’s hold of the 118 area remains a problem to the bull’s story.  Above 100 on TLT indicates fear remains in the markets and the lack of money moving from safety to risk has us concerned about the sustainability of the current run.  Once that money get’s shaken out and reinvested in say, tech and small caps,  the markets should have a steady source of fuel.

 

 

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