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Daily Quant | 2015 | March
best essay uk

2015 March

Tuesday, March 31, 2015

Posted by | The Daily | No Comments

2015-03-30.2

Three in a row?

It was widely talked about on the financial news channels that this is the first time in over a week that there’s been two days up in a row. Furthermore, we’ve seen each week reverse the previous week’s action. So far we are seeing the exact same action in the previous two weeks. Two weeks ago we saw a strong move, printing new all-time highs. Then last week we saw a very weak action with the market down over 2%. Now we are seeing the markets back up sharply as we complete the month and the first quarter.

The configuration has been much of the same over the past three months as we have been trading in a broad range between 2045 and 2114 in rough terms. The pattern suggests that if we can penetrate through 2090.70 then we will see a continuation to the upside to 2100.60/2105.05. It will take a close over 2105.05 to signal a retest of the 2019 historical highs. Each time we have risen up toward the 2100 level, we have seen substantial resistance and the market pulls back into the trading range.

However, a close above 2105.05 should set the tone for a different pattern and a continuation to the upside. As I discussed in yesterday’s Market Thunder broadcast, the underlying trends remain to the upside with the intermediate trends in a moderate uptrend and the long-term trends continuing in a very robust upward trend.

The key level on the downside today is 2076.85. As long as the market remains above that level we should see further upside movement.

The market should open flat to lower, with a 60 percent probability to close higher, should the market remain above the 2076.85 level today. 

Today’s Key Levels

  RX 2105.05
  R3 2100.60
  R2 2095.65
Resistance R1 2090.70
Prior Close   2086.24 +25.22
Support S1 2081.80
  S2 2076.85
  S3 2071.90
  SX 2067.45

Monday, March 30, 2015

Posted by | The Weekly Brief | No Comments

Market Overview
2014-08-25 YTD

YTD Performance

New month… New quarter… Back into the range…

This week marks both the end of a month and the end of a quarter but is also shortened due to the markets being closed on Good Friday. While the markets on closed, the banks will be open. As a result, the Fed will still be releasing the unemployment numbers on Friday when the market is closed. This is likely to cause some interesting trading as we end the week on Thursday ahead of the long weekend and major news to be released. Expect to see some unique volatility coming into Wednesday’s and Thursday’s sessions.

From an economic viewpoint, there is a fair amount of data points coming out early in the week with Pending Home Sales and the Dallas Fed Manufacturing Survey along with Personal Income on Monday. Tuesday we have the case Shiller HPI, Chicago PMI, Consumer Confidence, and the Redbook. Wednesday the ADP Report will be a featured report along with the PMI Manufacturing Index, the ISM Manufacturing Index, and Construction Spending. Thursday will have Jobless Claims and also Janet Yellen will be speaking.

As the month ends, it appears that it will end slightly negative after very choppy sideways trading for the entire month. With just two more sessions to complete the month, a close under 2074 will keep a neutral tone as we enter into April. There continues to be no real earthshaking news to make market sentiment shift sharply. Either way it would suggest that we are likely to remain in a trading range.

By the Box

YTD Performance

2014-08-25 StyleBoxes1

Performance Divergence

2014-08-25 StyleBoxes2

SP 500 for the week of 03/23/2015

2014-08-25 PriorWeek

2014-08-25 PriorWeekLevels

Looking back on last week

Looking back on last week

The markets began on a flat note and continued to decline just slightly with the S&P 500 finishing down 0.17% on the session. Two key elements kept he markets in a choppy range. First, there were continued negotiations between Germany and Greece over the Greece debt which is still at a stalemate. Second, the US dollar continued a moderate decline trading down to 96.86 on the dollar index. There was no economic news released to cause the markets to fluctuate very much as the market was in a very narrow range just above the flat line for most of the session and sold off in the last hour.

Tuesday

The markets opened slightly lower and attempted an early rally in the first two hours but then sold off as the S&P declined 0.61% on the session. There was across the board selling as all 10 sectors finished negative with technology being the strongest, down only 0.3%. The dollar traded in a stable range it was on track for the third consecutive day down but it rebounded after the CPI report was released and caused a rally.

Wednesday

Markets opened on the flat line but started to decline about two hours into the session as the markets sold off sharply, down 1.46% basis the S&P 500. This would end up to be the weakest session causing most of the damage for the week. In previous sessions technology was the stronger of the sectors. In this case it was the weakest being down 2.7% on the session. But all of the high beta groups such as biotech, chips makers and transport stocks retreated steadily throughout the session. In the end, eight of the 10 sectors were down and on individual stocks Intel was down 2.9%.

Thursday

The market opened weaker on the session but firmed up to trade along the flat line for most of the session as we saw a consolidation after the big declines of Wednesday. In the end, the S&P 500 finished down 0.24% representing the fourth day of losses on the week. Most of the action had to do with Saudi Arabia carrying out air strikes against rebel forces in Yemen. This news caused a flight to quality as the US dollar firmed up and gained 0.4% and was up 0.8% against the euro. Crude oil came into play as it surged 4.6% to trade back over $50 a barrel at 51.43.

Friday

The markets opened slightly higher and traded along the flat line for most of the session and managed to eke out a small gain with the S&P up 0.24% but ending the week down 2.23%. It was a very quiet session as the S&P spent most of the time in a 10 handle range, trading just around 2058 for most of the session. By the end of the session, 6 of the 10 sectors were able to show gains with biotech’s leading the way up 2%. This helped move the markets higher but most of the large elements in the market were flat to negative for most of the session.


S&P 500 for 03/27/2015

2015-03-27.2

Friday traded in a very choppy sideways range, closing the week with the first and only uptick for the week. The configuration suggests that the market is likely to continue a slight rebound off of Friday’s action moving toward the 2072/2083 levels early this week.

The critical level on the downside is the 2055.70 level. A penetration of this level will suggest a decline toward the 2049/2043 levels. With last Thursday’s big range we saw an increase in the three-day volatility Index back to 22 handles. This suggests we could see some reasonable action in the first three days of this week suggesting that if the markets can remain over 2049.70, then we are likely to see a minimum of 2078 on the upside.

The weekly volatility has also increased with the three-week indicator now at 57. This suggests that we are likely to see a potential range between 2089.65 on the upside and 2047.50 on the downside with an extreme of 2032.40.

As mentioned earlier, I do expect this week to be a reasonably volatile week. We could see some downside action if folks are fearful of the outcome of the employment numbers that will be released while the markets are closed. Also, there was very little activity on the VPM database. We continue to be at the 50.21 bullish percent level as we continue not to see any additional traction or sectors come into play in this rotation.

The fact that we are not getting any further expansion in the database is worrisome, although we have remained in a fairly narrow range for the past three months. As I’ve mentioned before, there just doesn’t seem to be any elements in the marketplace that can generate any positive or negative sentiment at this time.

Expectations are that we will continue the trading range, staying above the 2047 level and below the 2090 level for the next 2 to 3 weeks.

The market should open higher, with a 60 percent probability to close higher, should the market remain above the 2050.30 level today.  

 

This Week’s Key Levels

ER 2118.30
R3 2104.75
R2 2089.65
Resistance R1 2074.55
Prior Close   2061.02 -47.04
Support S1 2047.50
S2 2032.40
S3 2017.30
ES 2003.75

Today’s Key Levels

ER 2083.65
R3 2078.30
R2 2072.35
Resistance R1 2066.40
Prior Close   2061.02 +4.87
Support S1 2055.70
S2 2049.70
S3 2043.70
ES 2038.40

Friday, March 27, 2015

Posted by | The Daily | No Comments

2015-03-26.2

Has the Fed lost its magic touch?…

Yesterday’s action saw a steep decline early in the session, trading down just above the key support level at 2039.69 with an intraday low of 2045.50. The market rebounded sharply from there in response to jobless claims dropping as employment continues to be the only sentiment driver. It looked like another “buy the dip” session as the market was able to trade into positive territory briefly before settling slightly lower on the session. With this week down yet another one percent, we’ve seen the market move back to flat on the year as there seems to be a continuing struggle for a direction so far this year.

In yesterday’s report I mentioned a pattern failure. A failure indeed has occurred. This is why we were able to trade down to the 2045 level yesterday. However, the main event from the pattern failure is that the upward objectives have been negated for now, placing us in a sideways trading range unless the 2039.69 level is penetrated.

The configuration suggests that we are continuing to trade within the trading range of 2045/2115. We have been stuck in this range for nearly 2 months now. And as we complete this month, it appears that we will have a negative closing with the month down 2.59% so far.

This being the case, it is setting the continuing story of a momentum loss on the long-term charts suggesting a formation of the longer-term top. The underlying trends are still positive on a long-term basis but we are seeing quite a bit of momentum dissipate on the intermediate term as these weeks unfold in this sideways pattern. This suggests the market is getting more vulnerable to the downside decline. The critical number below the market is the 2039.69 level. A penetration of this level will suggest a further decline toward the 2024/2018 levels.

From a weekly expectation, we’ve seen the reverse of last week’s penetration of the extreme levels to the upside. This week we’ve seen a penetration of the support levels to the downside, illustrating this sideways, directionless market.

We have just three trading sessions left in the month.  It would take a close back above 2106 to signal strength for the month of April. There is likely to be further downside toward the 2017 level early in April if we cannot get a close above 2106 on Tuesday.

Today the critical level on the downside is 2050.30. A penetration of this level will suggest a retest of yesterday’s low and the possibility of trading down to the 2043.80/2037.25 levels. There currently is only a 40% probability this will be penetrated today.

The market should open flat to higher, with a 60 percent probability to close higher, should the market remain above the 2050.30 Level today.  

Today’s Key Levels

RX 2080.90
R3 2075.05
R2 2068.50
Resistance R1 2061.95
Prior Close 2056.15 -4.90
Support S1 2050.30
S2 2043.80
S3 2037.25
SX 2031.45

 

 

 

Thursday, March 26, 2015

Posted by | The Daily | No Comments

2015-03-25.2

Market Pattern Fails…

Yesterday’s action was unable to hold any of the support levels that were below the markets that I discussed in the commentary between the 2080 and 2078.50 levels. The penetration of 2078.50 set off a mini selling panic as we saw the Dow Jones industrials decline nearly 300 points and the S&P down 30 handles. The move down to 2061.05 suggests that there is much more to go on the downside.

On the Market Thunder show many times I’ve discussed this cliché “Expect more of the same until the market shows you something different”… I believe we are seeing something different. In previous patterns we’ve traded up to the figure or an even number like 1900 or 2000 and in this case 2100.  In the past, upon trading above the figure, we selloff and will come back in on the second rally and trade and follow through to the upside, moving into the 2150’s plus or higher levels, toward the next whole number which in this case would be 2200. This time the market rallied just shy of the historical highs and has reversed lower again. In past circumstances we’ve managed to get through the high. The current action and retracement is in violation of the previous pattern suggesting something different is indeed occurring.

We are now seeing the market fail and trade below the previous low in the pattern suggesting a more serious pattern is unfolding. There are two crucial levels just below where we are trading. The first is 2039.69 which was last week’s low. A penetration of this level will set the tone for a further decline to 2017.15/2015.40.

If the market cannot reverse today and close higher above 2077.10, then this will increase the probability of further downside in a market failure. However, should the market manage to get above this level, we would be setting up another potential V bottom. Yet, there is only a 40% probability for that at this time.

I will continue to develop this scenario after seeing Thursday’s action as we come into the end of the week and get closer to finishing the month of March. There appear to be many questions about to be answered. We will cover this in detail on Friday’s Market Thunder show at 12:00 noon. Be sure to tune in.

The market should open flat to lower, with a 60 percent probability to close lower, should the market remain below the 2071.55 level today.  

Today’s Key Levels

  RX 2082.05
  R3 2077.10
  R2 2071.55
Resistance R1 2066.00
Prior Close   2061.05 -30.45
Support S1 2056.10
  S2 2050.55
  S3 2045.00
  SX 2040.05

Wednesday, March 25, 2015

Posted by | The Daily | No Comments

2015-03-24.2

It’s Deja vu all over again

The market is looking familiar once again as it penetrated the 2100 level and then was unable to follow through to the upside. I mentioned in yesterday’s commentary the probability of the market declining toward the 2088 support level just as it declined into yesterday’s close at the low of 2091.50. The key number on the downside is 2087.55. A penetration of this level would suggest a further decline toward 2083.15/2078.70.

Very little has changed in the intermediate charts. We are seeing some softening of the momentum suggesting that we could reenter a sideways trading range between the 2078/2104 levels for several sessions. With no key economic results until Friday’s GDP, most likely the market will be trading with a slight bias to the downside if the 2087.55 level is penetrated.

On the upside, the 2108.25 level is the key pivot number. Should this be taken out, it will set the tone for a move back to challenge the 2117 historical highs. Currently, there is only a 40% probability for this to occur today.

All eyes will be focused on the action in the US dollar as market participants are worried about a resumption of the dollar’s rally which would most likely put further downside pressure on the stock market. The market did trade down to the support on the dollar yesterday. There’s a 60% chance that it has bottomed out and this pattern will start to move back toward the 99 level in the next two sessions. It is currently trading at 97.17.

The market should open flat to lower, with a 60 percent probability to close higher, should the market remain above the 2087.55 level today.  

 

Today’s Key Levels

  RX 2120.15
  R3 2116.45
  R2 2112.30
Resistance R1 2108.15
Prior Close   2104.42 -3.68
Support S1 2100.70
  S2 2096.55
  S3 2092.40
  SX 2088.70

Tuesday, March 24, 2015

Posted by | The Daily | No Comments

2015-03-23.2

Market hesitates…

Yesterday’s action was able to continue to follow through on the upside trading up to the 2114.86 level. However, it was unable to hold these levels and slipped lower into the last two hours of the session. The lower close has placed the market at a critical pivot point. If we cannot close above 2112.30 today then we could see some moderate downside action between the 2096/2088 levels over the next two sessions.

There is some fundamental news coming out today but there seems to be little to drive market sentiment either way. If the market cannot get above 2108.15 in the first two hours today then the market will trade toward the 2096.55 level with an extreme of 2092.45 on the session.

However, should the 2108.15 level be penetrated, expect the market to challenge yesterday’s high and ultimately move toward the historical high at the 2117.30 level. For the upward targets that I discussed in yesterday’s Market Thunder show of 2128, with a higher level of 2154/2169, we will need to get a close above the 2117 level to signal this move.

The market should open flat to lower, with a 60 percent probability to close higher, should the market remain above the 2096.25 level today.  

Today’s Key Levels

  RX 2120.15
  R3 2116.45
  R2 2112.30
Resistance R1 2108.15
Prior Close   2104.42 -3.68
Support S1 2100.70
  S2 2096.55
  S3 2092.40
  SX 2088.70

Monday, March 23, 2015

Posted by | The Weekly Brief | No Comments

Market Overview
2014-08-25 YTD

YTD Performance

Market begins to lift off…

As we begin the week we have a fairly light economic schedule. However, Friday does have the release of GDP which is likely to be an explanation point for market participants. Monday and Tuesday have the most economic news coming out with Monday focusing on existing home sales, while Tuesday has the release of PMI manufacturing and new home sales. Wednesday has durable goods orders and the weekly petroleum status. Thursday will be focused again on jobless claims and the Kansas City manufacturing index. And lastly, Friday is the big day with GDP expected to show an annual rate of 2.4%.

We are seeing a continuation of the labor market growing as we’ve seen over the past four months. This seems to be enough to convince market participants that the Fed is going to let things roll forward or at least attempt to. It may June or September before there’s even a chance of raising rates. Many market participants are not expecting any rate hikes until December of this year or early 2016.

As expected, last week was all about the Federal Reserve. We saw the dovish comments come out on Wednesday and this is exactly the point when the market started to accelerate, able to finish the week up 2.4%. While the strength is not expected this week, it does appear that we are entering into an accelerated phase to the upside. We are seeing a continuation of this pattern from a VPM database viewpoint as it continues to be around the 50% bullish percent level which suggests there is a continuation of the uptrend likely for the next several months.

By the Box

YTD Performance

2014-08-25 StyleBoxes1

Performance Divergence

2014-08-25 StyleBoxes2

SP 500 for the week of 03/16/2015

2014-08-25 PriorWeek

2014-08-25 PriorWeekLevels

Looking back on last week

Monday

The markets began on a stronger note as the S&P 500 rebounded from the previous week’s weakness finishing up 1.35% on the session. While all the indices were up, the Russell lagged, only up 0.6%, and the NASDAQ was up 1.2%. Most of the action was featureless and was dominated primarily by short covering. There were no economic releases to focus on, just an improvement in general market sentiment.

Tuesday

Tuesday started on a weaker note and traded in a sideways range for most of the session but was able to recover into the close showing a 0.33% loss on the S&P 500. Most of the action early on was being dominated by the tech weighted NASDAQ as it traded higher most of the session with Apple leading the way, up 1.7%. There was some mixed performance across the spectrum on NASDAQ. But overall, the index was able to lead the way, keeping markets from declining for most of the session.

Wednesday

Wednesday the market started on a weaker note ahead of the Federal Reserve’s release of the Open Market Committee statement.  But once this was released, we saw a sharp move to the upside as it was able to surge 1.22% higher on the day basis the S&P 500. Most of the action over the last several days were dominated by the market participants speculating whether or not the central banks were going to remove the word “patient”. But in the conference call it was found that the overall attitude of the Fed was much more dovish than previously believed. This set the market into a short covering rally and new buys showed up to push the market back above 2100.

Thursday

Markets were unable to follow through on the upside Thursday. This set the tone for a lackluster session and consolidation after the big move on Wednesday. The NASDAQ was able to move higher as it continued to move toward the 5000 mark as it was up 2.4% on the week. Once again, all eyes were on the US dollar as it showed that it was possibly topping out, taking away some of the fears of a continuation of the rally. This helped to bring in a more positive tone but was unable to generate any real market action.

Friday

Friday’s action continued to move higher as the S&P finished up 0.90% for the session and up 2.66% for the week. All eyes were on the US dollar as it was declining back to 97.89 on the dollar index. It had breached the 100 level briefly three sessions ago and now is showing some resistance at these levels helping to support a positive stock market sentiment. This also helped crude oil, gold, and other commodities to pounce off of their lows as well. We did see a sharp decline in US treasuries as they are back below 2% as the carry trade continues to represent a major cash flow into the treasury market.

S&P 500 for 03/20/2015

2015-03-13.2

Friday’s action continued to move higher, closing above the critical 2106 level, with a close of 2108.10. Several things occurred on this close. It signaled a retest of the 2117 level and also has triggered new objectives on a short-term basis on the upside. A minimum move to 2128 has been signaled but a close above 2117 will suggest a move toward the 2154/2169 level.

This also has signaled new objectives on the upside on the intermediate charts as a minimum is 2178 with an extreme expectation at this time of 2231/2264. This would represent a 5.8% to 7.4% move higher to reach these levels. Should this advance occur, it would place the market up between 8 ½ to 10% on an annual basis. This seems somewhat realistic and there appears to be very little downside with the current posture of the Fed and the market sentiment that is driving the underlying trends.

Both on the short-term and intermediate term trends we saw an acceleration to the upside with the close above 2106. This should be enough to drive the markets to the next level as we continue to see momentum build slightly.

We saw some moderate buying in the VPM database but nothing significant is rotating at these levels. It appears that a continuation of this neutral market move is likely as we move higher in the pattern.

Be sure to turn into the Market Thunder show at 12 noon Eastern today for full overview of market trends in the US stock market, the dollar, treasuries and crude oil.

The market should open flat to higher, with a 60 percent probability to close higher, should the market remain above the 2101.60 level today.  

 

This Week’s Key Levels

ER 2158.95
R3 2146.95
R2 2133.55
Resistance R1 2120.10
Prior Close   2108.10 +54.66
Support S1 2096.10
S2 2082.65
S3 2069.25
ES 2057.20

Today’s Key Levels

ER 2135.55
R3 2129.10
R2 2121.85
Resistance R1 2114.60
Prior Close   2108.10 +18.83
Support S1 2101.60
S2 2094.40
S3 2087.15
ES 2080.65

Friday, March 20, 2015

Posted by | The Daily | No Comments

2015-03-19.2

A positive week for the markets thanks to the Fed…

As we finish another week, patterns continue to be quite strong. As I have mentioned over the past eight sessions, a move down to 2045 would be a positive point which to enter new money into the marketplace. We saw a huge rally on Wednesday as the market pushed up over 2100 again to 2106. But during this time there was no acceleration on the short-term trends indicating that the market could follow through.

Yesterday’s action was quite disappointing as it was unable to follow through and close over the key resistance levels to signal higher prices. This configuration has been the norm for this market. As we rally up toward the 2100 level, we start to see substantial selling resistance, pushing the market back down into the trading range.

It appears that the market is setting up a new trading range between 2106 and 2076. The bias is still to the upside indicating that the market is likely to move above 2106 over the next 2 to 3 sessions to challenge the historical highs at 2117. As I mentioned two days ago, it is likely that the market will move toward the 2068 level over the next couple weeks. But it will take an initial close over 2106 and then a new close above 2017 to confirm these higher prices.

Meanwhile, it appears that we will remain locked until we get further stimulus to move the market higher. At this time it appears there’s very little economic news that could get the market moving.

The expected range for the week was a move up to a high of 2090.30. This level has been penetrated and it is likely that we will close above the projected high for the week. This suggests that the weekly volatility is going to remain at least at 45 handles and the daily volatility expected to be in the 20 to 25 handle range.

Expect to see the markets trading in a very volatile range trading between the 2106/2076 levels.

The market should open flat to higher, with a 60 percent probability to close higher, should the market remain above the 2083.35 level today.  

Today’s Key Levels

RX 2114.30
R3 2108.40
R2 2101.80
Resistance R1 2195.20
Prior Close 2089.27 -10.23
Support S1 2083.35
S2 2076.75
S3 2070.15
SX 2064.25

 

 

 

Thursday, March 19, 2015

Posted by | The Daily | No Comments

2015-03-18.2

Yellen comments cause short covering rally as market responds to dovish comments…

As was widely expected, the Fed removed the word “patient” from its statement. But in the press conference, Janet Yellen made it clear that the fact that they took the word patient out doesn’t mean they are impatient. An interesting play on words with market participants sensing the fear that is underlying in the Fed statement. To many this meant that the Fed is unlikely to raise rates at all this year, keeping rates at zero. We saw the 10 year treasury notes decline from 2.05% down below 2% to 1.95%.

Many were confused by the action of the markets. But I believe that the positive rally in stocks, the negative decline in the dollar, and even the rally back in crude oil suggests that market participants feel that the Fed will continue to supply liquidity to the system through the continuing reinvestment of the portfolio as well as keeping rates at or near zero.

This being the case, the carry trade driven by the zero yields will continue to unfold. The configuration with the close above 2190 suggests that we should retest the 2117 highs. As I mentioned two days ago, I believe that the market had signaled this retest and that the market would continue to have a bias to the upside.

In spite of yesterday’s sharp rally, the short-term graphs have not issued any new objectives to the upside. In fact, they suggest that there is a possibility that we will have a lack of follow-through today and see the market give back some of the gains that it made yesterday. The critical level on the downside today is 2092.65. A penetration will signal a further decline toward 2084.95.

However, should the market trade over 2106.35, all bets to the downside will be off. Furthermore, this will signal a move toward the 2114/2117 levels which will be the retest of the historical highs. Yesterday’s extreme range has kicked the three-day volatility indicator back to 29.60 suggesting continued volatility in today’s session.

Regardless of the action over the next two sessions, as long as the market can remain above 2077.30, we are likely to see a continuation of this pattern to the upside. A close below 2077.30 on Friday would suggest that there would be a minor pullback. Still, there is substantial support underneath this market.

Intermediate charts continue to confirm that this uptrend is likely to move toward testing the 2117 level with the possibilities of moving up as high as 2145/2172.

The market should open flat to lower, with a 60 percent probability to close higher, should the market remain above the 2069.15 level today.  

Today’s Key Levels

  RX 2128.60
  R3 2121.70
  R2 2114.05
Resistance R1 2106.35
Prior Close   2099.50 +25.22
Support S1 2092.65
  S2 2084.95
  S3 2077.30
  SX 2070.45

Wednesday, March 18, 2015

Posted by | The Daily | No Comments

2015-03-17.2

Market hesitates… Will the Fed remain patient?

As we come into Wednesday’s session everyone will be anxiously awaiting the announcement from the Federal Reserve meeting and looking to the statement for one word and one word only; “patient”.

Should this word not appear anywhere in a statement, it will be taken as a signal that the Fed will raise rates sometime between June and August of this year. As I have discussed before, the plan is to raise the Fed funds rate with the expectation that the yield curve will flatten rather than steepen. There are significant differences in the two shapes of the yield curve.

A flattening would suggest that long-term borrowing costs will remain under control while a steepening curve would suggest that long-term rates will rise faster than the short-term. Market participant’s expectations are clearly that the curve will flatten. It will take several months once the rates are raised for us to figure out the true effects of rising rates and the effect on the curve.

None of this will be figured out today, other than the fact that it’s likely to be signaled that the Fed will begin to raise rates in the next two quarters. Should this word be left out, most of the effects are likely to be seen in the US dollar and the 10-year treasury notes. It’s uncertain how the stock market will react to these changes. Although, a higher dollar would likely cause a selloff in the stock market.

The configuration on the chart suggests that the market needs to hold the 2069.15 level today. A penetration would suggest a move down towards the 2057/2052 levels with a possibility of retesting the 2040 lows rendered last week.

The patterns do also suggest that we are continuing to be locked in a trading range between the 2052/2080 levels suggesting more consolidation before the next directional move will be set.

However, today’s action is likely to set the tone for the next several days. A close above the 2090 level will suggest the markets will move up toward the 2017 historical highs over the next 3 to 5 sessions. It would take a close below 2040 for the market to signal lower prices (currently only a 30% probability).

The market should open flat to higher, with a 60 percent probability to close higher, should the market remain above the 2069.15 level today.  

 

Today’s Key Levels

  RX 2095.950
  R3 2090.850
  R2 2085.100
Resistance R1 2079.400
Prior Close   2074.28 -6.91
Support S1 2069.150
  S2 2063.450
  S3 2057.750
  SX 2052.600

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