Good Morning Traders!
The downside Breakout in SPs had good volume and the index hit the 50% retracement level of the prior daily upswing. The majority of the move came in the morning session and the rest of the day was spent consolidating the swing down. The 2-period ROC has a Buy Day setup and the market has traded two days high to low. All indexes were able to retrace backup to the 15 minute EMA but 30 minute Buy Divergences suggest that they may be able to rally back up to the 30 minute EMA (currently at 1949). An early morning rally will set up a shorting opportunity. The 60 and 120 minute charts made new momentum lows and this tends to demand a retest back down. If the market were to have a first hour sell off, it would set up a buying opportunity as the market is also oversold short term.
The Dollar index began to correct down on Tuesday and is having downside follow through in the overnight markets. if currencies have a large gap up basis US opening, do not chase. There still may bee room intraday for a long trade but overall upside is most likely limited to the 5 day high area in general.
Gold had a mini bear trap at the lower end of its trading range and can now trade back up to the upper end of the range.
Wheat has formed a nice rectangular base. The commercials are the longest they have been in many months. Should it have an upside breakout from this base, look for it to continue on up an equal distance to the upside.
Bonds – SHORT any rally above Wednesdays high or a lower high. There will be hourly grail buys on the first reaction down.
Fourth Quarter came out of the box with ACTION! Keep in mind that Third quarter was TREND in many markets that can now form a daily trading range (meaning, 1-2 days up…1-2 days down etc). Don’t chase if markets get away from you.
NOTE WHERE THE RUSSELL is on the DAILY CHARTS….Right at new lows for the year…..IF YOU DO NOT HAVE ICE, LOOK AT IWM as a proxy. DO or Die point!
Markets in BO Mode: