Monday, August 25, 2014

Equities: "Some Retracement Imminent ….. Probably"

In the intro to Friday morning's "In Rainy Jackson Hole, Yellen Ponders Labor Market Mojo" I noted:
There are signs that the current up move is not strong enough to take and hold the 2000 level on the S&P 500.
What may be required is a trip back to ~1900 or so to flush out any remaining weak hands/hot money. This could begin as soon as Monday, meaning lightening positions ahead of the weekend--something we are usually loathe to babble about on the blog--may be the better-safe-than-sorry tactic.

I'm writing about this on this particular post because Jackson Hole may be a catalyst, or at least be perceived to be by the explainers....
That was done at 9:01 EDT, pre the 1902.60 open.
Now 13 minutes into the new trading day we are sitting at 1,996.87, up 8.47 and Slope of Hope is thinking similar thoughts:
ES is well up overnight, and if that continues into trading hours, then there is an obvious target and significant resistance at the daily upper band, now at 2003 but possibly moving as high as 2005/6 on a strong open today. If that is hit and we see a strong rejection there that would then open up the daily middle band, currently at 1952, as a possible retracement target. SPX daily chart:
140824 SPX Daily Trendlines BBs MAs
There was some weakness/consolidation on Friday, and that did not hit the obvious trendline targets for a retracement. I have rising wedge support in the 1978 area this morning, and have added a scenario on the chart for a possible target in the 1974 area, as there is a nice confluence of support levels there. SPX 60min chart...