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There's a nice looking reversal setup on ES at the moment, with some positive divergence on the 60min RSI, and a little IHS that has formed overnight. I have the IHS target at 1230 and declining resistance on ES at 1230.75 at the moment. A nice setup that might play out:
That was a strange day yesterday, with Vix gapping down through rising support to make a lower low on the same day that SPX also made a lower low. We did see a reversal in the 1243/4 ES area that I suggested we might yesterday morning and that means that declining resistance is at least clear. Rising support is less clear, with a strong pinocchio through my support trendline yesterday at the low, though ES recovered above it by the end of the hour and (so far) it has been retested overnight and held. As long as that remains the case, and looking at the ZB chart, I'm expecting a bounce to test declining resistance again today. If declining support breaks breaks then I have two viable support trendlines with three touches each below. More details on the chart:
The first thing to mention today is that I'm switching over to the March contracts for all equity futures. On ES that means that the figures that I give are 5.75 lower than for the December contracts. Oddly that disparity, which is effectively the house cut for offering these contracts, is only 3.75 on NQ, which is less than half in percentage terms relative to ES. I've always wondered why that is. The percentage on TF is about the same as NQ.
ES has been consolidating for a few days without any hits of the two trendlines that I have been mentioning every day. That has changed overnight with declining resistance from July hit at the overnight high, and then rising support from the last low broken on the next swing down. If we are going to see some retracement on equities then this is the place, though we might see a bit more chopping about before it really gets going:
Good morning, everyone.
Well, those turd-monkeys in Europe are doing a masterful job of robbing me of my beauty sleep. I've been getting up at about 3:30 or 4:00 each morning in a state of anxiety, worried that the Euro is going to show a 300 pip spike because of the latest God Knows What. I was relieved to see the Euro's gains from last night had transformed into losses and that the hearty pushes higher in the NQ and ES had evaporated. So now I will simply be weary instead of nervous.
Since I'm up again at this ungodly hour, I'll share a chart that I found quite intriguing that illustrates, once again, how the trillions of dollars in artificial aid being thrown at the public has become the equivalent of throwing matches at a pile of kindling that's been soaked with Perrier. In spite of artificially-low mortgage rates, the amount of activity in the housing market is somewhere around bupkis.
I'm going to make a fresh loaf of gingerbread for my children for when they wake up. At least someone will have a pleasant awakening.
