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Friday, December 09, 2011

1st DOWN...3 to go...

If the markets were like football, I'd say that today's Daily candle on the Dow 30 (Year-to-date) chart below was the 1st Down...hypothetically, if the next 3 days played just like today, we'd see the Dow at 12800 by the end of next Wednesday.

Next Tuesday we find out the results of the next Fed meeting...I'm not expecting any kind of major QE stimulus to be announced based on today's preliminary inflation expectations of 3.1% (see graph below, provided courtesy of www.forexfactory.com), which, I believe is around the upper end of their inflation target...however, there may be some desire on their part to inject liquidity into the financial markets by some other means...this could be the boost that the Dow needs to, perhaps, make a touchdown...if not by the end of next week, then maybe by Christmas.

The following Daily Year-to-date charts of the S&P 500, Nasdaq 100 and Russell 2000 show resistance and support levels...there is quite a bit of resistance above the current price levels...it may take a further injection of liquidity into the markets by the Fed to move them higher...however, the Dow may set the pace for further upside movement without any kind of changes to the current Fed policy since it has already penetrated into (and held within) its resistance zone...so, the Dow will be the one to watch for any signs of strengthening or weakening, in my opinion.

The following Daily Year-to-date chartgrid of the YM, ES, NQ & TF shows a Volume Profile for 2011...the red horizontal line is the POC. The YM & NQ closed today near the POC, while the ES & TF remain quite far below theirs. I'll look for increasing volumes to enter and continue building on all 4 e-minis in order to signal that a continued advance is possible...otherwise, I'd expect price to drift back down into their current large trading range again...and, potentially, fill in gaps below.

Below is a Weekly Year-to-date chart of the YM, ES, NQ & TF. The current weekly candle closed higher...the YM & NQ are trading above the 50 sma (red), while the ES & TF are still below...the 50 sma lines up approximately with the 200 sma (pink) on the Daily chart above. This is definitely an area of extreme importance, since a break and hold above could form new support for all 4 e-minis. Of note, the 50 sma crossed above the 200 sma on the NQ on the Daily chart...this has now formed a bullish Golden Cross on this timeframe...will see if it holds in the days/weeks ahead.