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Below are 90-day 60-minute market hours only charts of YM, ES, NQ & TF. Overlayed on each chart are Bollinger Bands (which are based on the 50 sma and deviations of +2.0 and -2.0), monthly Volume Profiles (red horizontal lines are POC), 200 sma (pink), Volume Profile for the 90 days at the right edge of the chart, and my short-term RSI indicator. I've chosen this timeframe to look at price action from the October 2011 lows during market hours only.
Price is pushing the boundaries of the upper Bollinger Band, and my RSI is showing a negative divergence from yesterday's and today's actions…ones to watch to see whether they return to the mid-Bollinger Band (50 sma) soon. Alternatively, in view of breaks and closes above near-term resistance levels that occurred today on the Major Indices (except Dow Utilities), as mentioned in my post of January 10th, we may see a parabolic rise culminating in exhaustion volumes before such a drop takes place.
In spite of all the reasons – – analogs, statistics, stochastics – – that were emailed to me about why the market would absolutely, positively, no-doubt-about-it fall this week………it isn't happening. Indeed, the bulls have pretty much owned every single one of the eleven trading days so far this year.
The bearish case is getting weaker by the day, and the bulls were able to create breakouts across the board today…..
+ without any announcement from the Fed + without any big news from Europe + without any "stimulus" goose of any kind.
Just plain, old-fashioned, earnings-driven buying.
Well, after all the good reasons why the market would be down this week, it just isn't happening. 2012 appears to be the year when everything goes up a little, day after day.
The Russell 2000 has been threatening to break out. The level at 773 appears to have tremendous sway over this index, having represented firm support for a long time and, most recently, resistence. A clean break above this level might open the floodgates. Be wary.
We've been having a lot of days where the low has been made about 10.30 and equities then rose for the rest of the day. Yesterday broke that with a bounce that petered out and then drifted downwards until the close. That doesn't mean that we've seen a top, but it is a change in the character of the market. On ES we have broken down from last week's rising channel into a shallower one. A break below channel support in the 1280 area would look immediately bearish. Channel resistance is in the 1308 area: