Straining at Gnats

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Another day of bumping round slightly above the daily middle band so far. A retest of the high is really just a few handles away, but much of the last few weeks have been spent watching SPX repeatedly fail to retest the all time high at the time by a few handles. There’s a nice short term setup on ES to deliver the ATH retest but it remains to be seem whether that will be enough to get us there this week. This may just continue to kick around until after the Inauguration.

As and when the high is made, SPX is due a minimum 3.9% retracement from the punch over the weekly upper band a few weeks ago. That should get SPX much of the way back to rising wedge support, currently in the 2155 area. SPX daily chart:

170118 SPX Daily

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US Dollar in Early Correction Phase?

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The U.S. Dollar Index (DXY) has violated its “Dec 14 FOMC low” at 100.73, and is in route to probe important support at its prior two major 2015 peaks at 100.47 (Dec 3, 2015) and at 100.39 (Mar 13, 2015).  If these levels are violated and sustained, this will argue for a deeper correction into the 99.00-98.40 area as a next immediate target zone.

Let’s notice the glaring weekly momentum divergence at the 2017 high compared with the price momentum confirmation that occurred at the March 2015 high.

The juxtaposition of the intermediate-term momentum gauges with the unconfirmed new-high price action is a powerful warning that the USD could be in the early phase of a major correction of its May 2011 to Jan 2017 Bull Market.

Mike Paulenoff is founder of MPTrader.com, where he provides live intraday analysis and trade alerts covering the equity, commodity, and currency markets.

Testing the Daily Middle Band

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On ES I have two high probability setups looking for a retest of the high, which are the bull flag megaphone that has broken up and the failed ATH, though as ever during the last few weeks, crossing the few handles to that retest is taking a while. On SPX this is a backtesting of the daily middle band, which is holding so far. If SPX should break below it and confirm with another close the next day then the high would likely be in, but until then I’m still looking for that ATH retest. SPX daily chart:

170117 SPX Daily

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Morning Panic

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I had an interesting experience this morning I wanted to share with everyone, particularly since by telling the story, it may save someone a panic in their own trading.

I entered the day, as I always do, short a large number of individual equities. One of them was symbol FTI.

On my portfolio screen (Interactive Brokers), it shows all the stuff you’d expect – – symbol, entry price, quantity of shares, value of the position, and net profit/loss. In the pre-market, the P/L for the day is usually $0, because there’s no trading in most securities, although a few outliers will have information.

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