ES/SPY Weekend Look (Oct27-Sept1)

ES like the NAS closed out last week back where is started on Monday after the Evergrande dump. Price now sits a the top of the neutral just slight above the 21ema after. This after a large dip below the 55sma. As I mentioned in the NAS chart although I love my fibs it is obvious that the most traders and algos are respecting and reaction to the key 20/50 moving averages. With that in mind a continued move above the 21ema and out of the neutral would be very bullish for the NAS. Conversely a move back down below the 21ema would be bearish. A move below the 55sma would be very bearish. Interesting the neutral zone often overlays these two key moving averages.

The best set up for a bullish move right now would be a slight pullback into the neutral and then a break higher. A premature Sunday night breakout would likely require a pull back on Monday before moving higher.

I have to lean bullish after the strong recovery last week but I will remain cautious due to the fact that many risks remain. The risks include : rising 10y rates, Evergrande, Fed Taper, Taxes, Dept ceiling ect. Best not to get laser focused in either direction and trade what you see. Let see how it plays out.


Of note.

US 10y has broken out from a base
Last trading week of Sept.
US GDP on Thursday
PMI report on Friday.

Comment:

ES not as ugly as the NAS early this Monday. This has also rejected at the break of the neutral. It is back below the 21ema and now needs to hold 55sma. If it breaks the 55 we are looking at the bottom of the box. ES may hold up better due to banks and oil. Banks especially should show strength if yields continue to rise. Oil is at risk if the USD moves up.