Watch for a follow-on day and breadth to improve, we think $ES_F 1388 is the next target up $study

Around the Globe

    Asia – CLOSED

  • Shanghai (China) -0.40%
  • Hang Seng (Hong Kong) -0.16%
  • Nikkei (Japan)-0.12%

Europe as of 6:57am EDT

  • DAX (Germany) +0.21%
  • FTSE (UK) -0.25%

Today’s Economic News:


Only thing exciting today will be those building permits at 8:30am


Quote of the Day:
You can tell the character of every man when you see how he receives praise.
–Lucius Annæus Seneca

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


As long as we are on a Zweig Breadth Thrust Count (today being day 2/10) I will post the Zweig everyday.  We are looking to hit 61.5 by the time we get to day 10.  If that happens, good things will happen to the markets.

For our other breadth chart today, I want to share that the NHs/NLs cumulative index went from bearish to bearish-neutral.  That is a change, it hasn’t been anything but bearish since the beginning of November.  This  chart made a bearish turn in the beginning of October.  Change is afoot.  The battle for the bottom continues.


ES SP500 Futures Comments:

Short: 1388
Long: 1370


Nice leap off the bottom with no-retest, that is quite bullish.  There was another tell yesterday with the close, as some more shorts got squeezed out for a few extra few points.  There are too many shorts and too many people shorting, and they were forced out by the bell in order to make margin.    That bodes well for today as a follow-on day.  We think it will range today in the form of a bull flag, perhaps in a narrow range.   That makes the market susceptible to news noises and there is plenty of that afoot.   We have a fairly narrow range of buy and sell zones today, based on our assumption that range will contract.

We like the 1388 area short and think we are capped there.  We had 1380 yesterday, but there was still too much paste left in the tube and the afternoon of holding squeezed us out into the close.  We think there is some more in there, but only up to 1388.  On the downside, we like 1370/1368.  We are more uncertain there.   If we do visit there, and turn back up in the next couple of days, that makes a very nice inverse head and shoulders to play off of.

We are watching for a SP500 a/d line today above 2.25:1.  If we can get that, there is an 85%+ chance of catching a third green day, and that would really shake up the bears.  I think our 1388 line would have to be wrong to make that come to fruition, but if we are wrong, we have a plan B.


US Dollar DX Futures Comments:

To make us believers in the start of a rally, this dollar needs to move below that 80.50 area.


TLT Twenty Year Bond ETF Comments:

We also need the TLT needs to unravel for a sustainable rally.  We have a short-term target here at 124, but we think a reversal from there is very possible.


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