I hate to waste a good title. As I first penned this post we were flat on the ES. As I finished we are now up 1.75 on the ES.. For the time being we will pretend that we are gapless.
Let's start the relay cycle:
Asia
China celebrated the Western New Year by rocketing last night. Up a solid 2.1%. The Hang Sang still has not eclipsed the highs from last November but it is working hard to catch up. The Nikkei did a great job consolidating its gains at the recent highs staying green into the close. No weakness here.
Europe
Germany had some good overnight economic numbers but not enough to keep this consolidating day green. London is hanging on to its gains waiting for the US to open. Except of China the world today is basically flat.
Economic News:
Again no 8:30 news this morning. Pending home sales and factory orders at 10:00 am. Currently stronger economic news is rallying the market, soon the market will take growth as a negative sign and forcing the Fed to raise rates sooner then they are saying. Currently that is not the case but watch the reaction to the news to begin to see how the collective thinking is currently working.
Overnight Futures:
Pricing for the ESH10, SPX March futures stayed flat all night snug up tight to the recent contract and market highs.
Charts
The charts are bullish. My 40 DMA % Index chart was too slow generating this morning but I looked at it last night and yesterday's rally moved it from a score of 0 to a perfect +6, very bullish.
10 Day High - Low:
This chart also scoring a perfect +6 today. It was neutral up until the close which say a surge of stocks strengthen into the close. The NYSE has a reading of 35.02% and is about 8% away from the overbought area where the market has been correcting. We will be watching this over the day today for a tap out.
52 Week New Highs:
The 52 Week New Highs turned themselves around from last week's weakness. Only the Nasdaq composite was able to set a higher new high count. The RUT and NYSE set new price index highs with lower new 52 week highs. That is topping type action. The RUT and NYSE need to pass yesterday's bar of new highs which for the NYSE is 327 and the Russell is 152. We like to see about 50% of those values in the first 30 minutes of the market so we are looking for a 30 minute NYSE new high reading around 160 and for the Russell about 75.
The Nasdaq was so strong that it moved the 5 day moving average of the chart to the bullish side so while the other indices scored a 0 the NDAQ scored a +2 so grand total for all the charts is +14 out of +18 which is very bullish.
Today's ES chart
Well the gap is gone again. I have trading today in a fairly narrow range as we consolidate yesterday's thrust. I have a high target of around 1131 which if hit should sell off. I think a test of 1124.75 or the 1125 area on the ESH10 is probable and I would expect a close around the 1129 area.
Tomorrow is the day I had picked in December to be the market top for January. So if all plays out I would see consolidation today and attempt to rally tomorrow with a capitulated top and then the beginning of a slide for a high single digit correction.
That is what I see looking through my foggy lenses.
In the room Tom has us tip-toeing into shorts giving the market just enough rope to trip itself as we move into an early OPEX week next week.
Hope to see you in the room (http://TTTHedge.com) if not at least in the markets.
- Marlin aka RedlionTrader
