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Tuesday, October 09, 2012

Channel Support - YM, ES, NQ & TF

Very simply, we may see the 4 Major E-mini Futures Indices (YM, ES, NQ & TF) continue their trek down to the bottom of the channel on the Daily charts below. None of the RSI readings are oversold yet, nor are they diverging to signal a bounce. I would, therefore, assume that the recent selling will continue.

As of today's (Tuesday's) close, downside price targets would be:
  • YM = 13175 - 13200
  • ES = 1400 - 1410
  • NQ = 2650
  • TF = 800
 
To confirm any further pullback, I'll be watching the two Daily ratio charts below comparing the S&P 500 and Russell 2000 Indices to their respective Volatility Indices.
 
The first is of the SPX:VIX. Price closed today below the bottom of channel support, but is resting on trendline support, which is a bit lower. A break and hold below will spell further weakness for the SPX as volatility rises. A lower Momentum reading is signalling more downside for the SPX, as there is no positive divergence yet.
 
 
The second chart shows the RUT:RVX. Price also closed today below the bottom of channel support, and is resting on horizontal price support. A break and hold below will spell further weakness for the RUT as volatility rises. A lower Momentum reading is signalling more downside for the RUT, as there is no positive divergence yet.