December 18, 2015:
AFTER HEAD-FAKE RALLY WEDNESDAY POST-FED, RISK BACK IN BEAR MODE
Here are some random observations before we get into today’s analysis:
S&P futures reflecting new non-dovish Fed paradigm
Recap of last week’s thoughts on the S&P e-Mini Futures:
Here’s an updated chart of the S&P e-Mini Futures:
The S&P e-Mini futures have been on a violent roller-coaster ride this week – first rising powerfully (ahead of and immediately after the US Fed’s interest rate announcement) and then falling precipitously later in the week. The reality may be setting in that the Fed is now off of their previously dovish posture and are neutral to hawkish now.
Right now, the minis are at a point where they will either rally and re-capture support at 2014.25 – 2016 or they will tumble all the way down to the recent pivot low at 1983.As of 11:15am EST on Friday, they are trading at 2015 – so we’ll definitely have to pay attention to Friday’s close.
If they hold support at 2014.25 into the close, we think a rally should take place that will take the minis back up to the range of resistance at 2083.75 to 2097 (which represents both Fibonacci “correction resistance” as well as horizontal line resistance set by the peak on December 2nd.
We would be willing to own / buy the S&P e-Mini futures contract between 2012 and 2014.25 with stops in place on any close below 2012 and an upside target of 2083.75.
We would not be looking to short the minis unless and until a rally to 2097 played out – especially given seasonal tendencies surrounding the end of the year.