I suppose this post would have been more appropriate yesterday, or even this morning. Futures were up nicely. Gold, silver, ES, all of it. Then I noticed a fibonacci line on my intraday S&P charts and had to back them out to see what the reference was.
Yep. Not only were we printing new highs on the passing of extended Bush tax cuts, but we were also kissing the 61.8% retrace of the “big” move from 10/10/07. It only took the market a few minutes after the open to acknowledge this (plus we were already at R2) and down she came.
Actually took 2 trades today – one off the initial fade that was stopped out as the highs were tested. The other was the afternoon trade, where all hell broke loose, on good news nonetheless. Once 1,227 broke that was it. Nice trading.
At this point I think we have a shift in sentiment that may well last a few days/weeks. We’ll have to see, but I get the sense from traders that this is the last good week of full volume trading, that nobody wants to be holding long positions through the holidays and that the risk trade is suddenly back off. It makes sense now that we have literally tagged the perfect 61.8% retracement level of the big move down.
I’m now looking for 1,200 as the next area of support longer term, and then 1,175 after that. Ahh yes, that 1,175 area that couldn’t break just a few days ago.
Pivots for tomorrow on the ES (and don’t forget contract rollover begins Thursday AM) –
- R2 -1,241.50
- R1 -1,232
- Pivot – 1,225.50 (looking for this to hold resistance)
- S1 – 1,216
And here’s an oldie but goody from the best band ever. Interesting how some of the captions from 1992 still apply today, maybe even more so!