Wednesday, June 17, 2009

Pre-Opening Briefing: Shift to a Downtrend

Here we see the S&P 500 e-mini (ES) futures prior to the 7:30 AM CT release of consumer inflation numbers (bottom chart). What you can see is that we broke below the early June range (purple horizontal line); note how that range support turned into upside resistance early yesterday as we moved further into May's trading range. This transition from a range trade to a short-term downtrend was anticipated by
the non-confirmations among the indicators I track and has also been reflected in recent indicator readings, which I put out via Twitter (follow here) prior to each market open: more new 20-day lows than highs; Supply exceeding Demand; less than 50% of stocks trading above their 20-day moving averages, etc.

We should stay below the early June range to sustain the downtrend. I'll be tracking intraday sentiment and intermarket themes (strong dollar, weak commodities) via the tweets to see if we can sustain the downside.

8:23 AM CT - In the top Market Delta chart, we see that we're building value at the low end of yesterday's trading range, as in-line inflation numbers at 7:30 AM CT could not sustain a move to the upper end of the overnight range. With acceptance of lower value, we keep the short-term downtrend intact, with short-term resistance at 908/909.