TradeStalker's
Support and Resistance Update
12 / 26 / 2010
(Published Since 1996)
...............................................
Dateline: 5:34 pm eastern time, 12/26/2010
The market rallied again last week, making new 52 week highs
each day until a pullback on Thursday. The move was a boring
grind higher on light volume, and there was a series of
narrow range days. On Monday through Thursday the ES had
ranges of 9.50, 6.00, 4.50, and 5.00 points, respectively.
It has been a non-volatile move up, with the largest
pullback over the last 3 days being the 4.50 point pullback
on Thursday afternoon. No doubt, this was partially due to
it being a holiday week, but the low volatility is normally
a sign of losing momentum and often seen near market tops.
The sentiment picture is getting more extreme. The Investors
Intelligence data has the number of bullish advisory
services at a level seen about a month before the 2007 top.
The SP500/Vix ratio reached 81.5 on Wednesday. The last time
this ratio was in the 80's was May 15th, 2008. The SP500
cash topped on closing basis 2 trading days later, then
dropped 50 SP500 points in 4 days, and 210 SP500 points in
about 2 months to a July 15 temporary low.
That said, the market is coming into the most bullish period
of a month, normally the last 2 days of the month an first
day of a new month. If the upside is going to continue, then
the 1249.50-1248.50 zone on the ES and the 2225.00-2223.50
zone on the NQ need to hold on a pullback. On the upside, a
move to the 1257.50-1258.50 zone on the ES should be
rejected if the market is topping out. To start a topping
process and/ or turn the trend, we need a close below the
low of the high day, which is at the 1250.50 level on
Monday.
On Monday, look for early strength to be reversed in the
first 40 minutes of trading, at the latest. If that occurs,
then the first decent pullback needs to stay over the
1250.75 area on the ES, or quickly reverse if broken,
otherwise things will likely be changing short term and the
bounces then should be sold. If that is held on a dip, then
the market can still try to push higher. If that happens,
trail a tight stop on any longs and beware that bounces
likely won't be able to stick over the 1258 area on the ES.
However, if that area is not a problem, then a push over
1260 is not impossible but shouldn't hold on the first trip
over that level.
March 2011 SP futures resistance
symbols: emini = esh1 / big contract =sph1
1253.50-1254.00
1257.75-1258.50 major
1262.25-1264.00
March 2011 SP futures support
symbols: emini = esh1 / big contract =sph1
1250.75
1249.50-1248.50 key
1244.75-1244.25
1240.00-1239.25
1236.25-1235.50
March 2011 Nasdaq futures resistance
symbols: emini = nqh1 / big contract = ndh1
2232.50-2333.50
2237.75-2238.50 major
2244.25-1246.00
March 2011 Nasdaq futures support
symbols: emini = nqh1 / big contract = ndh1
2227.00
2225.00-2223.50 key
2218.25-2217.75
2212.50-2211.50
2205.50-2204.50
---------------------------
Good Trading,
Mike Reed
Copyright (c) 2010 by TradeStalker.com, Ft Wayne, IN.
TradeStalker Updates may not be redistributed without
permission.
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PO Box 9783, Ft Wayne, IN, 46899
Disclaimer
The financial markets are risky. Investing is risky.
Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy
or sell any security. Opinions are based on historical
research and data believed reliable, but there is no
guarantee that future results will be profitable.
We are not advocating trading futures. The prices and
contracts in the TradeStalker Updates specify a manner
in which you could trade. We occasionally mention the
SP500 and Nasdaq futures markets because it is
extremely liquid and tends to lead the other markets.
This is not an endorsement or recommendation of the SP500
and Nasdaq futures markets. The risk of loss in futures
is substantial. You can lose more than your original
investment. We are not Registered Investment Advisors or
Commodity Trading Advisors.
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