Monday, December 21, 2009

Santa Claus Rally Or Just A Big Fib? / Emini Futures Trading - Monday December 21st, 2009

(QQQQ)(SPX)(SPY)(UDN)(UUP) 


Wall Street Kicks Off Holiday-Shortened Week On Upbeat Note

12/21/2009 4:41 PM  ET




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Obama Praises Senate Vote Clearing The Way For Health Reform
(RTTNews) -  Stocks saw notable gains on Monday, as some traders bought into the market amid progress on the healthcare reform front and continued revitalization in corporate activity. The day's upside may have been limited by light trading volume amid the Christmas holiday-shortened week. (more)


 S&P 500 May Climb 6% on Santa Claus Rally: Technical Analysis 
By Shani Raja (Bloomberg) --
The Standard & Poor’s 500 Index may end the year as much as 6 percent higher if a typical December rally drives the gauge past a key resistance point, according to technical analysis by Bell Direct’s Julia Lee.

The index, which closed yesterday at 1,096.08, has climbed through December in 16 of the past 20 years, said Lee, an equities analyst in Sydney. Further gains this month in what’s sometimes known as a Santa Claus Rally could push the gauge past 1,121, the 50 percent retracement level that Fibonacci analysts identify as a point of significant resistance.

“The 1,121 level is the 50 percent retracement from the high of the bull market in 2007 to the low of the cycle in 2009,” said Lee. “It will be a challenge to break past that, but if it does, my guess is that the index will drift even higher to 1,160. If it doesn’t, we’ll probably just see a sideways movement.”
The S&P 500 tumbled 57 percent from its high on Oct. 9, 2007 to this year’s March 9 low as the global recession deepened. The gauge, which has rallied 62 percent since then as government stimulus measures helped shore up economic growth, has climbed less than 0.1 percent so far this month.
The S&P 500 had its biggest December gain in 1991, when it rose 11 percent. Its steepest decline was 6 percent in December 2002. The index has posted an annual gain in 14 of the past 20 years.

In technical analysis, a Fibonacci retracement is created by taking two extreme points on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6 percent, 38.2 percent, 50 percent, 61.8 percent and 100 percent, according to Investopedia.com.

Once these levels are identified, horizontal lines are drawn and used to identify possible resistance and support levels. If a price breaks through one of the levels, it may signal a move toward the next resistance or support point.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

 CFRN S&P 500 Emini Futures Daytrading Results



Sloppy, choppy action might best define the ES today. Price broke out above our 1104/1105 area in pre-market trading and spiked to just over the 1110/1111 zone before reversing. For the past 2 weeks our weekly levels have included the 1107/1108 zone. Although those numbers do not appear in this weeks calculations, we did highlight them on the chart above in yellow to show that even though we may have forgot them, the market certainly did not. In fact on the move up, price turned down just enough to touch the doorknob one last time at 1107 (to the tick) before relenting to move higher. Henceforth, such obsessive market behavior will be referred to on this blog and radio program as "pulling a Monk". If you've never watched an episode of Monk, please do and you'll fully understand what we're trying to convey.

Reminder - Tomorrow will be our final official broadcast of 2009.

Merry Christmas!

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