Short Term Trading Week Starting: 3 December 2018, page-44

Good morning,

 

US Indices onTuesday's close: SPX: (-3.24%), IXIC: (-3.80%), Dow: (-3.10%) and RUT: (-4.40%)

 

The opaque rectangle in the above chart is not a gap, per se. It represents a weak area of futures action from last Wednesday when the Fed Chair's speech juiced things going into the weekend's trade war 'truce'.

 

The most important thing I could see from today's session is that ES futures did a lot of fighting

just above the level that corresponds with the thin area of last Wednesday's (Fed Chair speech)futures profile.  The area in question begins at 2698 and ends at 2719.75.  This area has been on the radar as we went above SPX 2775which is 50% retracement area off the 29 Oct lows.   Futures tried an intraday bounce based at2712 today and that slowed their fall as they neared the base of that weak area. In other words, traders thought that the balance area of Wednesday 28November was worth a try.   Today's time based point of control was about 2722 and the area with the most contract business and volume was 2702.25, just over the session close of 2702.

 

 Speaking of rationales for the retreat from ES2814/SPX 2800.18 and the failure to hold the half retrace of Oct lows...a prolonged, closing violation of the 2698 area would mean that not only don't they care about the Buenos Aires meeting outcome and the tweets from this AM about being a "tariff man", but they also don't care about the FedChair speech.    Today's headline rationales for the precipitous drop have me wondering.  If the hype going into Buenos Aries was suspicious, the depressing analysis days after coming out seems a bit overdone,too.   Perhaps confirmations of that dour assessment are in play as well.  Many of today's headlines speak to defects in the big economic picture.  At the very least we can assume that unknowns vis tariffs are the trigger.  Still, it all seems a bit contrived, if unexpected by many. It's a melee!