ES/SPY Weekend Levels (Dec 12-16)

The ES closed the week down 2.63% after trading in a range of 155. Price continued its back and for movement within the recent range that began on Nov 15th just below the 200 SMA. The ES started the week above the 200 SMA and only few points below the major downward trend line. Despite some bullish momentum from the previous week price did not continue higher. The ES fell back below the 200 on Monday and traded back down to the low of the recent range by the end of the week breaking the upward trend line drawn from the Oct 13th. The move was bearish, but controlled to the downside. The market is waiting on new information. The week ahead may provide the data the market needs to decide if the longer term down trend will continue or if price can break through the important 200 SMA and the major downward trendline. CPI data on Tuesday and the FOMC rate decision on Wed may provide the catalyst needed to break the S&P out of its range.

• Down 2.63% last week
• Futures front contract rolled over from Z to H shifting data in the continuous contract
• CPI data due out Tuesday
• FOMC Rate decision and Powell commentary Wednesday
• S&P is consolidating just below 200 sma and downward trendline
• Bulls see the consolidation as flag at resistance. The bears see the consolidation as a reversal pattern at resistance
• Bottom of box = key 1st support / 200 SMA = 1st key resistance
• June 17th Low = Longer term support / Aug 16th pivot = Longer term resistance
• Upward trendline from Oct 13th low has been broken
• The S&P is leading the price action due to it proximity to the 200 sma
• Narrative has flipped from Inflation to Recession
• Fed pivot could be perceived as negative as it may confirm recession
• Max importance this week = Powell FOMC comments
• Massive move in either direction possible important to keep bias neutral

WEEKLY EVENTS

Monday OPEC Monthly Report
Tuesday US CPI
Wednesday EIA Crude Inventories, FOMC Interest rate decision & commentary
Thursday US Retail Sales, US Jobless Claims & US Industrial Prod.
Friday US S&P Services PMI Flash & Manufacturing PMI Flash

NOTABLE EARNINGS

Monday COUP, ORCL
Tuesday BHP
Wednesday LEN, TCOM
Thursday ADBE, NTDOY
Friday DRI

BULLISH NOTES

Price above 55 ema
200 SMA break through is possible
Potential positive reaction to CPI data
Potential positive reaction to Powell comment
Break above downward trend line may cause massive, short covering rally

BEARISH NOTES

Price back below 9/21 ema
Price below downward trendline & 200 SMA
Longer term trend remains down
Market expects at least one more flush lower
There has been no VIX spike above 40
Potential negative reaction to CPI data
Potential negative reaction to Powell comments
Massively inverted yield curve = potential recession
Price has broken upward trend line from Oct 13th

Comment:

CPI sent the indexes sharply higher. ES now back at the descending trend line and back above the 200 sma. If this trend continues possibility for a massive rally higher. Must wait on the cash session however b/c this is key resistance and price can easily still reverse.

Comment:

ES has faded back to the 200 sma. Price must be able to hold the 200 sma for bullish continuation. A failure to hold the level would be very bearish.

Comment:

Did not hold the 200 sma and closed below it yesterday after an unprecedented gap fill. Very rare to see a gap so large filled in one day. Currently very bearish setup given the location of the rejection, but FOMC complicates this. Price can still rip either way.

Comment:

Below the ascending trendline at testing the bottom of the range box. Key level needs to hold or good chance we see June 17th lows again. Bears winning right now.

Comment:

The ES broke the bottom of the range yesterday. So far has not been as weak as the NQ though. The NQ has touched it 618 Fib and the ES remains above the 50% Fib. Following the NQ more closely as one follows the other and I believe the NQ is leading. Bounce potential at this point in the day as it is Friday and options expiry.