Here is the ES/SPY weekend look for Dec 6-10. Last week the ES opened strong on Monday an bounced 55 points, but was met with strong selling at the red zone identified in my ES updates last week. The selling continued the balance of the week with the index closing down 1.27%. The week was very volatile with heavy selling in Consumer discretionary, Finance and Info tech. The move can be blamed on a combination of negative factors which include the Fed retiring the word 'transitory' when talking about inflation, Omicron fears, weaker than expect job# and continued Fed tapering.
This week the previous week's low and the 55sma will be key levels to watch. The ES bounced Thursday & late Friday (after another big sell off) from the 55sma. Like the NAS its hard to tell if the bounce was actual buyers coming in or just short covering going into the weekend. If the ES finds support at the 55sma look for price to hold above the neutral. The ES has now tested the 55 level twice so it is looking stronger than the NASDAQ. A continuation back to the highs will not happen until price breaks the resistance zone between 4585 and 4645. On the down side if price breaks last week's low and the 55sma the next level of support is the bottom of the neutral and the lower trendline defining the bottom of the upward channel. Below that the green box and the Oct low would be in play.
Be mindful that during times of extreme volatility technical analysis becomes less effective due to high emotions. Expect exaggerated moves in either direction. I will update as things play out.
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Weekly events...
Tues...US international Trade
Wed... JOLTS & Oil inventories
Thur... Jobless claims
Friday... CPI data & University Mich sentiment
Bullish notes..
Support found at 55 sma
Price extended to downside
Santa Rally still possible
Powell softens tone to calm market
Bearish notes...
Vix +30
Spike in the 20y Treasuries (flight to safety)
Omicron worries
Taper tantrum continues
Valuation concerns
Mega caps under pressure
Emotional market participants trading commission free from their phone
