Rebel Traders – Analysis Without The Hype

The action in the market today was driven mostly by the technical’s. That is, the end of day reversal was upon the channel support discussed over the past two days in the market videos.

On the hourly chart of the S&P 500 E-Mini’s we discussed the channel (green lines), and today that channel offered support towards the end of the day. Today’s rally into the close appears to be simply a technical bounce and nothing more.

I will cover this in much greater detail in the weekend video.

(click chart image for larger view)

As discussed in the last market video, the S&P 500 E-mini futures broke below a trend line last Friday which was present on the hourly chart.

While the U.S. markets were closed today, futures trading continued for part of the day. At this time the S&P e-mini futures are up to the resistance level (trend line), and that resistance level appears to be holding at this time.

The levels discussed in the videos and highlighted in the chart posted this morning broke to the downside. The bears awoke hungry today and had a helping of bull meat for breakfast and lunch.

Will discuss further in tonight’s video update.

S&P 500 E-Mini

Hourly chart of the S&P 500 E-mini’s

A critical level is now in play

This morning the Q3 GDP was revised lower to 2.8% (from 3.5%) and personal consumption was also revised lower to 2.9% (from 3.2%).

The mortgage industry is still falling apart from within. Consider this news out of Freddie Mac (FRE) this morning:

Freddie Mac Reports Oct monthly metrics; Single Family delinquency rate 3.54% v 3.33% m/m

Until there is a significant improvement in delinquencies this data still suggests much steeper losses lay ahead of us in the financial sector.

S&P Case Shiller Price Index came in ‘not so hot’:

SEPT S&P/CASESHILLER-20 Y/Y: -9.36% V -9.10%E;   HOME PRICE INDEX: 146.5 V 146.9E

It had been showing the slightest sign of stabilization in recent reports, now it is headed back down again.

During the overnight hours we got confirmation of the channel on the S&P E-mini’s with the /ES trading down to 1098, right at the channel support line.

Watch this channel carefully, a move below the channel is the dynamic change needed to set this market into a new downward path. The range of the channel is 1100 on the bottom and 1120 on the high side.

S&P Futures

Today’s damage to the markets began in the early morning hours when the currency markets went crazy. The Euro sank, the US dollar rose, and the S&P 500 futures declined significantly.

All of this action left the S&P 500 in a state of “uh oh”

Some significant damage was done this day…

S&P 500 E-Mini

S&P 500 E-Mini Futures – Hourly Chart

(click image for larger size)

S&P 500 E-Mini Futures - Hourly Chart