Expect more of the same for US equity markets this week

YM emini daily

Last week for US equities could best be described as good two-way price action for day traders but fraught and worrying for investors, and when considering the three primary futures of the YM, the NQ, and ES, for once all were in agreement on the daily timeframes, so I have chosen the YM Emini as a representative example.

It was the start of the week that signaled a change in sentiment with Monday’s upthrust candle standing tall like a flagpole on the top of a hill and sending a strong signal of potential short term weakness which duly arrived on Tuesday with heavy volume confirming the strength. However, note the following day which was Wednesday, where we had a wider spread than the previous day yet lower volume, suggesting selling pressure was easing which was indeed the case with the recovery on Thursday on good volume.

However, it is Friday which is the concern and note how the volume has fallen away on the widespread up candle, and whilst not an extreme anomaly, the fall-off is a worrying sign, and one that has been confirmed in early trading with weak Chinese data helping to cap further advances for equity markets. For the YM Emini, it’s now a question of breaking through the volume-based resistance at 34,200 for a return to the longer-term bullish trend. And speaking of the longer-term, the inflation narrative is likely to dominate the coming weeks and months, with markets reacting and overreacting to data so expect to see more of last week’s price action which is great for day trading, but not so good for the nerves of longer-term investors.

By Anna Coulling

Charts from Ninja Trader and indicators from Quantum Trading

About Anna 2016 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

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