Today’s Economic News:
Nice numbers out of the UK and Germany. Those numbers have the markets all jacked up for a big open in the USA today. On the home front, watch the jobs data we get daily from today into the jobs numbers this Friday.
Quote of the Day:
We need not all agree, but if we disagree, let us not be disagreeable in our disagreements.
–Martin R. DeHaan
Featured Breadth Chart of the Day:
Our short term trender, the McClellan Summation Index is telling us this market is in serious need of a pit stop to refill. That could be a while as we lap on fumes, but if this indicator really rolls over, it is time to bias the short-side.
Comments and Levels for the Front ES (S&P500 – Emini futures) contract:
Short: 1769
Long: 1755
Squint just a bit at the chart or spread some Vaseline on your monitor and you can visualize a really ugly inverse head and shoulders (iNHS) pattern in this consolidation period from the 1773.25 contract highs. (Hint: Use goo-be-gone to remove the Vaseline). That iHNS points all the way up through to new highs at 1775. Caution for shorts is advised. This market still has the capacity to pop. We have to remind ourselves we are in the bullish season of the market as we head to the end of the year finish line. How close is it? Just 31 trading days left.
The market breadth is signaling that the market is weakening and that needs to be balanced against the season. Last year we headed into the year end with budget issues that added turbulence and violent volatility into what became a bullish close, it was tough to trade. This year we have rockets firing on an upward trajectory that will hit an apex at some point and return to earth, but that could be from higher prices.
Our featured chart, the McClellan Summation Index, needs a glance everyday as we look for a real turn in the signal and a move to meet up with the 15 day moving average that trails it. Once we see that we will become more bearish, until then we remain afraid of the bull and respectful of the need for speed from this market. We have a lot of wealth to recover since 2009.
For today, 1769 marks a possible trajectory top for the day, if we blast through that, the bull is alive and well. If we contain then consolidation continues. On the down side it is a break of 1748 that has us feeling a bit bearish. For today, though, 1755 will be an area of interest on the weak side.
On the MiM:
A shrinking MiM. I did trade the MiM yesterday and profited a point and a half on a half-hearted, half-committed trade and invested trade. We skirted above my –66% requirement to validate a trade on the Symbol percent number and I decided to dip my toe in based on an increasing dollar value into the 3:20pm EST entry point. I justified. I was rewarded a bit but once seeing the evaporating size and dollar percentage, I jumped out. Too bad, as I could have made a bit more, but I didn’t want to have to write an entry about how I didn’t trade my rules and lost.
It does remind me that trading rules are there to be tested and modified, but if you do modify them, do it with respect. You will never capture 100% of a trade 100% of the time. That thinking will kill you. You need to take a consistent chunk out of the middle.
The ride on the MiM has been perfect as far as how I have traded it for the last 8 trades or so. If you want to take a cheap ride for a week ($7), MrTopStep is having a boot camp starting this Friday. It is a great time to get involved with a very talented group of traders for a week of live trading and webinars. In addition, each day, we trade the MiM into the close as a group.
If you want to be a part of the boot camp click on the text that is a color on the end of this >>sentence right here<<.
If you want to join the meter readers you can go to: Join the MiM
Comments about TLT (Twenty year Bond ETF):
Nice correction to the TLT. We are lost as far as a move from here. We can generally predict… good economic news, lower, bad news higher. For now we want to see how we react to 104.50 area.
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Breadth Charts in Full:
Zweig Breadth Thrust:
Unless this open falls apart we will not see the 47 area we want to hit as that could give us a healthy stepping stone for higher prices.
Cumulative Volume Index:
This has a bit of a roll that should be concerning to the bulls.
Number of NYSE issues trading ABOVE their 40 day moving average (40DPI):
Look how breadth is weakening yet price isn’t giving it up. Eventually breadth will have corrected enough for the next boost up.
New Highs / New Lows ratio chart:
Again, we thought we would want to see 70s as a correction point to a platform for higher prices.
Trenders:
Short Term Trender - McClellan Summation Index:
Bearish.
Long Term Trender - Cumulative 4-week Highs – Lows (the fat lady):
Bearish.
Thank you for Reading –
Marlin aka RedlionTrader @redliontrader