1121 - S&P 500 (50% Retracement)

Just thought this would be a good chart to show. It's always best to get a macro view of the market to see the big picture. What is happening in the market? The last candle will finish at the end of December. I do see us at least reaching 1121, which is 50% retracement from the overall highs & lows.

After six quarters strongly bearish, it's just in line to let up some -- pressure relief. That's what the past 2 quarters and htis one is.

What I find interesting about the monthly chart is we've had 8 months of bullish candles. As I look back, 8 consecutive months is the most months in the past 25 years (since '84) before it is broken by a bearish month. By bearish month, I mean the closing price is less than the opening price for the month.

October is the 8th month. What will November hold? I do see us from a pattern standpoint for the market to hit 1121 at some time.

What I find interesting is that though price is climbing, the $VIX for the prior 3 months prior to October has been doji's. Volatility is NOT going down as price is going up. What does that say to me? Traders don't really believe price action will continue too much further up.

Truly to go from 666 to 1071 is over a 400 point move on the $SPX. On 1 contract of the $SPX in futures, that's a $20,000 profit if you traded December 2009 contracts. Wow, amazing, isn't it? I really don't know what the liquidity of trading contracts that are 9 months out. My gosh.

Okay, I just went 9 months out from where we are now, which we are in Dec'09 contracts to Sep'10 contracts. There is basically NO LIQUIDITY there. Even 6 months out, there isn't good liquidity. There isn't even enough data in either 6 or 9 months out to even have a real price action chart.

The next contract out from Dec'09 is Mar'10. The daily liquidity is averaging 1.82M. This is more tradable on a daily basis, but certainly trading fast may not be real good. I don't really know as I haven't even done it in practice. This is after the fact and after hours.

Actually, as I'm looking at the volumes on the various contract expirations on the ES, I'm really not quite sure what I'm looking at. Sorry.
Labels: edit post
0 Responses

Amazon Store