Monday, January 19, 2009

Update… Futures Activity

Yesterday our futures opened and proceeded to march higher on good feelings and HOPE for the future. DOW and S&P futures rose to the top of their respective channels and then began to fall overnight until Europe opened and more bad news from European banks began to emerge.

Below is a chart with the 30 minute /YM (DOW) futures on the left, and the 5 minute /ES (S&P) futures on the right. You can see how we descended in a well formed channel that we broke to the upside on Thursday and Friday. We opened higher yesterday, went up to the 38.2% fib line, then came back down and are now nearly 10 S&P points lower than Friday’s close. The way I have the current up channels drawn, we broke them to the down side but came back up just prior to the lockup:

Futures will open again tonight and we’ll find out if we then take a trip higher in the channel or if we break it to the downside.

Interestingly, the bond market was selling off as the futures were selling off as well. That’s one of the signs I wrote about to look for in my article Bond Market Hide & Seek – A Domed House & 3 Peaks....

TLT is not trading, but the long bond futures (/ZB) descended to the bottom of its channel which means that TLT may open beneath its channel which would indicate that the 3 peaks and a domed house pattern may still be in play.

Beneath is a chart with the TLT daily on the left and the long bond futures on the right. A break beneath the TLT channel would be bearish for bonds. Note that the /ZB futures on the right are now sitting at the bottom of its channel and that it was selling off at the same time as equities above (that’s a 15 minute chart of /ZB):

Tuesday is definitely going to be an interesting day with the markets open and the inauguration taking place at the same time. Many are hopeful…

Jon Bon Jovi and Bettye LaVette at the Inaugural Celebration: