Europe, Europe, Europe. The markets are being driven by the headlines regarding the debt crisis in Europe. I cannot remember a time in my career when the markets are moving so dramatically based on headlines coming from governments on a day to day basis. The market is moving so fiercely off of these headlines that it is shaking people out on both sides of the market. Some, actually most of the time these headlines do not even change or fix the problems that we are having in Europe.
In the first part of November the bulls were looking to take control of this trade and take the market higher into the end of the year. The middle part of November was all about the bears coming back and reminding everybody that they have not yet given up. The last part of November the bulls came charging back with a hundred point rally in the E-mini futures in just four days leaving the month of November basically unchanged (down fractionally). Most of this action was driven by headlines and now we are back at the prices where the battles between the bulls and the bears have been taking place over the last couple of months.
As a technical trader I cannot predict what the headlines will be in the future so I rely on the technicals to help me determine the next move of the market. When the headlines come out I watch to see if the headlines coincide with the technicals or if they collide with the technicals. When the headlines coincide with the technicals we see the biggest moves…when the headlines collide with the technicals we see a choppy trade. Once the market digests the headlines I use the technicals to determine whether or not damage was done to either side or if one side takes control. At the moment the headlines are starting to favor the bulls but overall they have been in favor the bears. I think that the headlines will remain back and forth, but if they start to get consistent to one side then I will be watching to see how it affects the markets technicals.
The technicals; the Nasdaq 100 futures are now trading above all of their major moving averages and back in the top part of this year’s range, that is bullish action. I think that as long as the Nasdaq can sustain trade above their 200 day moving average they will try and lead this market higher. The Dow Industrials are also trading above all of their major moving averages but not quite as strong as the Nasdaq. Although the Dow is not quite as strong as the Nasdaq I feel the same way about the Dow; as long as the Dow can sustain trade above their 200 day moving average I think that they will try and lead this market higher. The Transports recently broke their daily down trend and tested their 200 day moving average. They are still in negative territory for the year but if they can get back above their 200 day moving average that will be good news for the bulls. If they cannot get back above their 200 day moving average then that may weigh on the market and we could see another selloff across the board. The S&P (futures, cash, SPY) are just coming off a retest of their 200 day moving averages and unchanged for the year. This has been a major road block for the bulls. If the S&P cannot sustain trade in positive territory for the year and get back above their 200 day moving average I think that this rally could be short lived. If they can get through this area then I think that we will see a rally across the board into the end of the year.
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| Year to date range | 295.81 | November Settlement | 1246.96 |
| Year to date % Loss as of 11/30/11 | -0.85% | November % Loss | -0.50% |
| Novembers Range | 118.89 | November High | 1277.55 |
| Average daily range | 24.04 | November Low | 1158.66 |
| Yearly High 5/02/2011 | 1370.58 |
| Yearly Low 10/04/2011 | 1074.77 |
| 2010 Closing Price | 1257.64 |
| 2011 Opening Price | 1257.62 |
Chart Information
Moving Averages; Black (10 day), Blue (20 day), Green (50 day), Pink (200 day) Purple (150 day smooth avg.). Horizontal Lines; Blue (High of the year), Red (Low of the year), Green (Unchanged for the year, Black (last summer’s range) , Light Blue (Highs/Lows of importance).
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| $ES_F |
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| $DJIA |
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| $DJT |
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| $NQ_F |
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| $VIX |
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