Emini Futures Trading Update – 18Mar2016

sp500-emini-futures-weekly-chart-18mar2016

S&P500 Technical Analysis – for Week of 18 March 2016

The above weekly chart of S&P500 Emini Futures indicates a triple bottom at 1850, and hence a strong bounce back, which has the strength to go all the way till 2100. We have got 5 green weeks back to back, which is one of the most powerful rallies in recent years. Above 2100, the market opinion will be very divided, and there will be enough people willing to short, and any further advances above 2100 will need good support from strong corporate earnings and global macroeconomics data.

Moving Average Indicator: The market is very BULLISH. Everything in this indicator is pointing to higher prices: the fast average is above the slow average; the fast average is on an upward slope from the previous bar; the slow average is on an upward slope from the previous bar; and price is above the fast average and the slow average. Market trend is UP as long as the S&P500 index is above 2000 level.

Momentum Indicator: Momentum (138) is way above zero, indicating an overbought market. The long term trend, based on a 45 bar moving average, is DOWN. The short term trend, based on a 9 bar moving average, is UP. Momentum is indicating an overbought market. However the market may continue to become more overbought. Look for further evidence of weakness before getting bearish here. Momentum is likely to increase above 2050 on S&P500 index. So avoid short positions above 2050.

Volatility Indicator: The volatility trend, based on a 9 bar moving average, has just switched to down. Lower volatility indicates improving investor confidence and increased liquidity in the market. If you wanted to sell some stocks to increase cash position for any reason, now is a good time to do it.

Commodity Channel Index (CCI) Indicator: CCI (46) is in neutral territory. A signal is generated only when the CCI crosses above or below the neutral center region. Please note that CCI often misses the early part of a new move because of the large amount of time spent out of the market in the neutral region. Initiating signals when CCI crosses zero, rather than waiting for CCI to cross out of the neutral region can often help overcome this. Given this interpretation, CCI (46) is currently long. The current long position position will be reversed when the CCI crosses below zero.

Relative Strength Indicator (RSI): RSI is in neutral territory (at 56). This indicator issues buy signals when the RSI line dips below the bottom line into the oversold zone; a sell signal is generated when the RSI rises above the top line into the overbought zone. RSI is somewhat overbought (at 56). However, this by itself isn’t a strong enough indication to signal a trade. Look for additional evidence before getting too bearish from here.

MACD Indicator: MACD is in bullish territory, but has not issued a signal here. MACD generates a signal when the FastMA crosses above or below the SlowMA. The long term trend, based on a 45 bar moving average, is DOWN. The short term trend, based on a 9 bar moving average, is UP. MACD is in bullish territory.

Open Interest Indicator: Open Interest is trending up based on a 9 bar moving average. This is normal as delivery approaches and indicates increased liquidity.

Volume Indicator: The long term market trend, based on a 45 bar moving average, is DOWN. The short term market trend, based on a 5 bar moving average, is UP. Volume is trending higher, allowing for a pick up in volatility.

Slow Stochastic Indicator: The stochastic is bullish because the SlowK line is above SlowD line. The long term trend is DOWN. The short term trend is up. SlowK is starting to show the market is overbought. A top may not be far off, so we have to be cautious with fresh long positions. 2000 on the S&P500 index is absolute cut-off for all long positions.

Swing Index Indicator: The swing index is most often used to identify bars where the market is likely to change direction. A signal is generated when the swing index crosses zero. No signal has been generated here.

Disclaimer: This commentary is designed solely as a blog post or market commentary for the understanding of technical analysis of the financial markets. It is not designed to provide any investment or other professional advice.

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