Following such an explosive move for many markets and in particular, for US equities, I always find it helps to step back a little from the fireworks of last Monday and look at this in the context of a slower timeframe, and in this case, it is the weekly chart for the YM Emini future.
First, and perhaps most revealing is when we consider the Trend Monitor indicator which remains steadfastly blue and continuing to signal the longer-term bullish trend remains intact and now set to propel this index through the key 30,000 barrier and beyond as we continue to break away from the volume point of control in the 26,000 area. The two bar reversal of mid to late October was a strong signal the bears were weakening as the bulls stepped in during the first week of November and continued in control during last week, coming off the 30,000 high precisely to close at 29,410. Early trading on Globex has seen risk on sentiment continue to prevail as the index trades at 29,680 at the time of writing and with two key areas now breached. First, is the resistance at 28,800 and denoted with the blue dashed line which was taken out last week. Second is the advance into a low volume region on the VPOC histogram to the right of the chart, and which is therefore likely to offer little in the way of meaningful resistance from a volume perspective.
So expect to see risk on continuing to dominate, driven by a number of factors, not least a resolution to the Presidential election and positive vaccine news. Enough to help equities continue their progress in a more stately fashion.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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