Bull flag in place, the market needs to retest that $ES_F 1410 area

Around the Globe

  • Shanghai (China) -1.10%
  • Hang Seng (Hong Kong) -1.18%
  • Nikkei (Japan)-0.05%

Europe as of 7:07am EDT

  • DAX (Germany) -0.37%
  • FTSE (UK) -0.36%

Today’s Economic News:

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Decent numbers out of the UK today.  In the USA we have pre-market CPI and NY Empire numbers that are worth listening in on.  The premarket Industrial production number  will be coming out at 9:15am ET  and can also be a market mover.   Distillates out at 10:30am.


Quote of the day:

The only function of economic forecasting is to make astrology look respectable. – John Kenneth Galbraith

Current Breadth Readings: (click here to see all our breadth charts)

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We lost the McClellan Summation index to neutral.  We use this indicator to help us stay in a trend, it takes two negative days to get us to bear so a one day grace period is in process.  The markets need to show some enthusiastic buying, right now low volume and volatility at the top leaves this market vulnerable to the downside.

 

ES SP500 Futures Comments:

Short: 1414
Long: 1388

Yesterday we hit 1409.50 and that has pushed up our short area for today to the 1414 area.  On the downside, we think a move down to 1388 will be bought up.   We are sitting at the bottom of the channel here and we are very interested in the 1402.50 pivot area as a possible lower high setting up for a larger correction.   That is marked as a key area now for the bulls to capture, the equivalent area for the bears is 1394.

Breadth is starting to crack just a little, nothing that a nice up-day wouldn’t correct.  That pre-market 1409.50 candle has us a little concerned as it looks a little exhaustive in nature and took us out of the bull flag channel, setting up a possible fake breakout.  We think the cash market is going to want to test that area yet.

The market for now remains bullish biased for us with a “buy the dip” mantra.   That buy area starts at 1388 for us.  We are premarket here on a 60 minute RSI buy signal, if that pays off today, then the bull flag channel remains intact.

 

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US Dollar DX Futures Comments:

Our dollar is coming into heavy upside resistance which sits at that 82.75 area.   A break above that will mark a correction phase in the equity markets.  A failure there will mark an upside ok signal.

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TLT Twenty Year Bond ETF Comments:

That 125 respect line broke yesterday.  The markets did not rally.  We are looking for TLT to recapture that 125 area.

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