End Of Day Recap
Submitted by Nic Lenoir of ICAP
Well, today for once played out like we expected at least. Upon failure of breaking forcefully through 1,070/1,075 early in the session, we did have one of those lightening fast no volume rally. However we were positioned for it following the early morning game plan. Only surprise is almost that we did not go all the way challenge the highs at 1,098. I guess we had to leave a little bit of work for the Asian session.
From the lows this morning we have what looks like and a-b-c so c might not be complete yet. As I type Amex's earnings came out better than expected, so needless to say that will add a little fuel to our fire. I expect this move to be a 5 leg impulse that will top between 1,098 and 1,007, where I will be looking closely at the market structure as I think we could have a good shorting opportunity there.
I re-inserted my Dax chart because it has been a great guide through the last volatile days, and so far the price action is a mirror image of last September, so one would be crazy not to keep it in mind.
Note on the daily chart of the S&P future that the MACD has hardly turned in terms of the second derivative. The good news is we have a lot of divergence, and we look very close to turn though. We would recommend considering using some bullets if we open around the highs tomorrow.
In 10Y Treasury futures we failed to break the support this morning as expected, but the upside was relatively limited, partly also because of the push higher in equities. I would expect we test again 117-20/117-24 in the morning, and we would watch again very closely how the market reacts there. We have enough momentum to break, and maybe make it to the 116-20 support but that seems a bit of stretch, the odds are rather to retrace here up to 118-08/118-24 before anything material happens.
Good luck trading,