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S&P E-mini signals, setups and targets
Coverage for January 12.
Thursday's open was likely to gap up, and early overnight price action suggested as much. Then S&Ps dropped back under Wednesday's cash session closing level. Corrective targets were met while MACD & RSI improved, so an Aggressive long-entry parameter was posted at ESh 1424'00, with potential to 1431'50. The target was met within an hour and held as resistance for awhile, but ultimately proved to be 4 points too low. MACD & RSI diverged negatively on new highs into the noon hour, signaling a top, and the afternoon's bias-down signal soon triggered another 3-point play. The next bounce target also produced another sell signal, and another 3-point play, closing the session back at the morning's ESh 1431'50 target.
Why ESh 1431'50? It was the maximum target of several separate patterns. And since the target held on a closing basis, buyers trapped at Thursday's higher highs are assumed to be "weak hands." If those buyers are actually "wisely premature" then Friday's open will gap or spike through Thursday's high (or, at least, above the afternoon's lower high). Not an easy task ahead of a three-day holiday weekend.
Meanwhile, the Dow is outperforming S&Ps again, so Wednesday's buy signal didn't repeat. Internal spreads were 2-1/2 times more NYSE up volume than down volume, and 2-1/4 times more advancing issues than decliners; Friday's market is obligated to reward Thursday's sellers for their relative productivity. The wide spreads suggest the reward will only be momentary if delivered at Friday's open, more powerful if delayed.
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