Watching 1337.50 $ES_F for a hold and 1355 for a reversal confirmation, else short

By : May 5, 2011 at 7:47 am

 

Asia:

  • Shanghai _0.26%
  • Hang Seng –0.24%
  • Nikkei –Closed

Europe as of 7am EDT:

  • DAX –0.9%
  • FTSE –1.02%
  • UK Services PMI 54.30 misses 56 expected and 57.10 last report
  • German Factory Orders m/m –4% misses 0.4% expected and 1.9% last report
  • UK Interest rate decision kept the interest rate at 0.5% as expected unchanged
  • 7:30 am Eurozone Interest rate decision expected unchanged at 1.25%

USA:

  • 12:05am Monster Employment Index came in at 145 beating 136 last report
  • 8:30am Initial Jobless Claims expecting 400K, 429K last week
  • 8:30am Continuing Jobless Claims expecting 3638K, 3641K last week
  • 8:30am Nonfarm Productivity q/q prelim 1% expected 2.6% last report
  • 8:30am Unit Labor Costs q/q prelim 0.8% expected –0.6% last report
  • 9:30am Chain Stores Sales y/y 2% was the last report
  • 9:45am Bloomberg Consumer Confidence –45.10 was the last report
  • 10:30am Natural Gas Storage 68B expected, 31B last week

 

Quote of the day:
“We don’t need to spike the football” – Barrack Obama

 

Current Allocations:

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Breadth:

 

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Breadth remains at –16 for two days in a row.  The NYSE 50 DPI signal is missing for a perfect breadth score, that makes watching the NYSE which is holding up relatively well, the one to watch today.

 

ESm Contract

 

Yesterday we talked about moving to trade planning on the current ES contract which is the SP500 futures contract and right now the front month is the June contract (M).

 

Today we move to the Ninja Chart version which is the chart displayed live in the room so the lines will always be in place as we trade.

 

The bull line today remains at 1373.50 although 1365 would be pretty victorious also.

 

The bears need to break  that 1337.75 low and a weak Europe has us right on the line this AM as I am writing.

 

Baby steps for the bulls today as they have not been able to put in a higher high on our 60 minute chart for the last three days, so a break above and hold of 1355.25 would do that and perhaps get some short covering to start a climb back up. 

 

If 1337.75 breaks look to 1332.30, that is the 3% pullback area.  There could be some additional buying there that might be strong enough for a bounce that could get something going to the upside.

 

We are on the cusp of failing the head and shoulders fulfillment of the predicted 1400 area from March.  Our neckline below 1337.75 will begin to be penetrated.  There is a ton of support  all the way down to 1324.  Should we travel down to there and fail, I would expect we are in a major correction.

 

The NYSE is in relative strength mode, so I will be watching the NYSE a/d line today.  Anything below –2:1 will be very very bearish.  If the NYSE can hold up through the day I will be leaning slightly toward the bull side watching our charts for a break above 1355.25 to signal a possible bottom reversal.  If we fail I will short go short.

 

The direction is now down and the bulls need some help today.  I am bearish on the day, my first day so I have the freedom of changing my mind intraday and I have spelled out my criteria.

 

Tricky market here, play it tight if you are going to the upside.

 

Good trading

-Red

 

 

 

 

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