A Jack of Small Trades

The major U.S. benchmark indexes ended Friday’s session in negative territory. The Blue Chip Dow 39 closed down 251 points (1.45%), the Nasdaq Composite ended down 48 points (1.03%) and the broad benchmark S&P 500 ended down 26 points (1.30%).

Friday’s sell-off down to 1985 put the S&P at or near the January 16th low and down 77 points (3.7%) below the monthly high.  

S&P futures traded up to 2062 on 01-09-15, before selling down to 1970 on 01-16-15. The S&P recovered from the 1970 sell-off and traded back up to 2062 on 01-23-15.

However, there was no buying interest above the 01-09-15 high. Indeed the market development that followed would suggest that long positions in the January trading range have been liquidated.  

Friday’s late in the day sell-off increases the likelihood that the 01-16-15 low at 1970 will be re-tested, along with the possibility of a re-test of the 12-16-14 low at 1960 and the potential for a lower low.

The market developments in the last three days of the month are particularly concerning.

On Wednesday, following the FOMC announcement S&P futures sold off below the opening range low at 2016, below the prior day’s low at 2012 and traded down to 1988.

On Thursday, the market development

 

The late in the day rally up to 2038 continued higher in the overnight session. S&P futures rallied up to 2048, 24.50 points above the closing range pull-back to 2021.

The overnight rally encountered resistance at the lower edge of Monday’s trade cluster, and the S&P sold off 18 points, pulling back to 2028, before auctioning up 11.50 point to 2040 at the time of this post.

In the previous session, the broad benchmark S&P 500 sold off 41 points below the prior days high at 2062, pulling back to 2013, before auctioning up to 2036. The retracement was followed by a 15 point pull-back to 2021.

The month of January has witness increased volatility, with the S&P selling off below the 12-28-14 all-time record high at 2088, pulling back to 1884 on 01-06-15, auctioning up to 2062 on 01-08-14 only to sell back down to 1970 on 01-15-15, before re-test the 2062 high on 01-21-15.

While the global markets have been supported by accommodative monetary policy from the Central Bank, including a new QE program from the ECB, economic data continues to indicate slow growth.

Today the markets are likely to be extremely volatile as the Federal Reserve announces its latest policy guidelines.

The consensus is that the FOMC at its 2-day meeting that ends today will leave its interest rate and policy guidance unchanged.  There will be no updated

S&P futures sold off from Monday’s high at 2055 during the overnight session and pulled back to 2025: 29.75 points (1.4%) below the closing range high.

On Monday, S&P futures traded back up into Friday’s trading range, filling the “gap” at Friday’s close 2042 and auctioning up to Friday’s high at or near 2057.  

While the outcome of Monday’s session appeared to place the S&P on the price trajectory to re-test the 01-07-15 high at 2062, selling pressure emerged during the overnight session and S&P futures sold back down to re-test Sunday’s Globex low.

The reversal during the overnight session raised concerns about the market direction ahead of a two-day FOMC meeting that gets underway later today.

Earlier in the month the broad benchmark S&P sold down to the 12-16-14 low at or near 1970. Friday’s rally up to the 01-16-15 high at 2062: 92 points (4.6%) marked a recovery attempt.

Yesterday, the U.S. markets

After “gapping” below Friday’s close at 2043 and selling down to the prior fractal highs at or near 2025 at the open of Sunday’s Globex session the broad benchmark S&P 500 close above Friday’s finishing the session at 2054.

On Friday S&P futures sold down below the initial retracement up to 2062 equal to the 01-07-15 high. The 16.25 point pull-back was approximately an average daily range. S&P futures traded up 11 points above Friday’s 2048 pull-back level, but “paused” at the high where the auctioned encountered buying interest waning.  Later in the day the S&P sold down from 2057, breached support below the opening range low 2048 and traded lower into the close 2043.

S&P futures traded about the 2025 “gap” low, auctioning up to 2035, before recovering back up to Friday’s close 2043, Friday’s low. 2047: 21 points above the overnight low.

At the open the market encountered a lack of buying interest above Friday’s low 2047 and the S&P sold down 12 points and pulled back to 2034, the price level where the S&P rallied off the low and “paused prior to filling the “gap” at the open.

During the mid-day session S&P futures had difficulty trading above 2048. However, late in the day buying interest returned and after pulling back to 2045, the S&P rallied up to 2054: 20.50 points above Monday’s opening range low.

While the S&P has not traded above January resistance at 2062 the price trajectory is arguably on the path to re-test Friday high; the 01-07-15 high at 2062. The remaining distance to the all-time record high 2088 is 26 points above Friday’s high.  A rallying up to the December high would be an extreme price excursion.

A retreatment to 2088

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