January's First week - 5 Jan 2012

It's been a long break... and so many things are happening in my life just now... all good things though!

Happy New Year to one and all!

If you are wondering what's up with this market movements up and down and it seems that the story is changing on a weekly basis - well, you are right! I am slightly leaning on the the bearish side just now, being cautious (not sceptical) about the rallies that occur. As it turned into 2012, the S&P500 futures (/ES E-mini) opened with bit of a bang, gapping up and giving many a bullish hope for 2012.

Singaporeseeds sent me a message: "Gap gap!" on the 3rd of January 2012.
I replied to him... "Watch it close (the gap)!"

Two days later... it looks like it will happen as this gap is NOT what is typically known as a "gap-and-run".

Here's what I see in the ES charts...

The weekly chart above has a bullish candlestick pattern as Christmas came... but it scored that on low volume. Currently, there is no strong underlying trend and the weekly MACD appears to be attempting a bullish breakout. Emphasis on "attempting"
The daily ES chart on the right panel has bullish MACD, again clearly based on low volume trading. This is followed by a gap up on the first trading day of 2012. The daily ES tested the 200MA FIVE times in the past three months, and it just did a gap up on low volume. This already hints of a "gap and close" rather than a "gap and run". To some other chart artists (aka chart technicians), it may be what is referred to as a "blow-off top".

Well, the 30 mins intraday ES chart show this "gap and close" clearer, with immediate support at 1260-1262 which is where the current ES is holding at time of writing/analysis. What happens thereafter will show hand as soon as the gap is closed at 1250, which is confluent with the Fibonacci XOP.

There are times that a market trends... and other times that the market just fluctuates. This is one of those times the latter takes precedence. Hence, my caution.

Watch it over the next few days...
Oh yeah... if anyone noticed, the Euro is being thrashed yet again.


The MadScientist
5 January 2012

Note: ALL material posted here is from my personal opinion, and my opinion may differ or change without notice. These do NOT constitute as solicitation, investment nor financial advice. By reading the materials presented here, Readers acknowledge the awareness that the materials are intended for educational purposes only. For investment(s) advice, related decisions and/or actions pertaining to investments, always consult your own qualified financial advisors, brokers, etc.

Charts are from TD Ameritrade Thinkorswim platform