Here is today's wave chart as of 11am ET. It is constructed from the 5 minute bars showing day session e-mini trading.The first wave was downward and lasted about 15 minutes while dropping the e-minis about 6 points. Note the obviously declining volume during this wave which made it likely that it was corrective. The subsequent up wave carried the market up about 9 points and has lasted 70 minutes so far. This shows that the bulls are in control right now.
However the volume has stayed lower than it was near the open. This together with the fact that the market has reached the 865.75 high of January 19 means that the bulls are not very confident or aggressive here. This implies that the market will probably react from here. Earlier I estimated a 11-13 point reaction, but since the bulls are now in control I think it is reasonable to expect nothing more than at 6-8 point break from here.
The Fed announcement will come out at 2:15 ET today and I expect a lot of volatility then. But I will try to be a buyer on whatever break comes after the news provided it doesn't push the market below 850.
4 comments:
I am flat ahead of the fomc announcement, but the one thing that is bothering me about this move is that the Dow is underperforming. The dow seems to sell off more when financials are weak but now we have a financials dominated rally and the dow lags! Unless of course we are seeing a gradual shift into tech -in which case this rally has a lot further to go.
In any case, short term the trend is bullish for SP.
A fair upside target for SP would be 868.50 which was the close on 1/13, the day prior to that big gap down on 1/14. Also worth noting that 870 is 50% retrace of the 942.75 to 797.50 move.
Due to the way the DOW is calculated and the low share prices of the financial companies that are DOW components, a big move in the financials, up or down, does not cause a big move in the DOW.
These new charts are much more instructive for us learners, thank you for your efforts.
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