The market (of note: our market is the e-mini S&P 500) went out with a bang! and possible signal??
The market gapped down on the open and slipped below our support line at 1250 to touch 49.50 if only for a brief second before trading in the gully of the 1250 – 55 range for most of the lackluster trading day. The last hour of the session saw the most volatility in weeks. Almost forgot what volatility looks like (I’m sure it’s on the way though….quiet before the storm as the saying goes). At the end of the last trading session for the year two-thousand ten, the market fell hard for 3 points, only to come charging back up 6 points to print above our interest point of 1257. In fact, the market closed at 1257.50, but the settlement was adjusted to 1253. This adjustment may be very telling….
So why was 1257 our interest point? Well, this weeks lackluster trading session has managed to form a complex H&S top on the 60M (all session) chart. In order for this H&S top pattern to be invalidated the market needs to close above 1257; as such, we should see her kiss 1260 and possibly move to higher marks. The inability for her to close above 57 could be a sign the bulls have run out of steam and a near term top is in place. For now the H&S top is still valid. We’ll have to wait until next year to see how this story plays out….