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Tuesday, August 30, 2011
Hanging the markets out to dry...
Below is a 4-hourly chartgrid of the YM, ES, NQ & TF...we can see how the markets have been pulled up and are "hanging out to dry" after their whoosh down the waterslide which began in July...beginning with a bounce on August 8th after the U.S. credit rating downgrade by Standard & Poor's.
A closer look at this chartgrid shows that, today, the YM, ES, NQ & TF rejected a bid to move much further above the pivot high set in mid-August and have, so far, moved about 78.6% of the initial bounce from their pivot low set on August 21 (August 22 for the TF). A matching 100% move up would place price at:
11820 for YM
1241 for ES
2264 for NQ
737.70 for TF
N.B. These prices are confluent with their overhead resistance levels for the YM, ES & TF...the NQ has already encroached into this level and nearly reached the 100% level today...we'll see if this was the NQ's "last hurrah" or not over the next few days/weeks.
One of the gauges I'll use to see whether or not these e-mini futures indices advance any further, is a cluster of Volatility Indices. As can be seen on the Daily chartgrid below, they are holding just above their pivot lows set in mid-August, which have formed near-term support.
The markets may be expecting a "helping hand" from the Fed at their upcoming September meeting, so they may just bounce around in this latest large range until a clearer direction is formed, along with institutions'/traders'/investors' opinions...and, by that time, they may have a clearer picture of the financial and fiscal situation in Europe and perhaps of politicians' intentions in the U.S. We may not see a larger, more meaningful move until more information is forthcoming. However, in the absence of any encouraging news, the markets may just resume their slippery ride down the waterslide and break below their lows of this year.