Wednesday, November 23, 2005
Issue Contents:
| 09:55 | Market Direction And Key Levels |
Big Picture
This week we’ve seen two of four major indexes break out to new multiyear highs, above what should be considered important resistance. Early in the process of a breakout there remains much potential for a reversal, so traders won’t be dancing in the streets just yet – no doubt the put buying volume is rising even as we speak. However, until the breakout process confirms a reversal we’ll obviously want to keep our bias to the upside intact.
Major Indexes, weekly
Confirmation of this breakout on the weekly chart will naturally take a few bars, implying a number of weeks, unless price heads straight up, which certainly is within the range of possibilities.
Key Futures Levels
Of principle concern in the short-term is this steep formation – the longer this rally goes up without a significant retracement, the higher ADX will rise in the larger time-frame charts and the more likely we’ll see a sharp pull-back (not a market reversal) when sellers get a little wind at their back.
YM 45M
Let other traders blow their capital trying to nab “the top”; with such a strong trend in place we really want to stick to the long side unless:
1. A clear down trend forms on the 5M chart, or,
2. A classic test of top or 2B test of top shows up, preferably on a larger time frame such as the 15 or 45M chart
YM 5M – near term resistance near 10880; if price fails to clear resistance this morning, key support should be found at T1 and T2 marked here, 10850 and 10825. If price fails to hold 10850 then we might see on the 5M chart a down trend form and aggressive traders might consider selling short for scalps.
Remember – bond markets close early and all markets are likely to trade with less vigor as the day goes on. Protect capital in slow markets!