Jonny.Pro

7/10 Market Recap.

BATS:SPY   SPDR S&P 500 ETF
132 0 0
This week the market experienced high volatility in prices, much more than the ranges we are used to. This activity of course, cannot be detached from the ongoing developing story of the U.S debt ceiling. Early last week the market dropped sharply as concerns over an upcoming solution to the government shutdown and the debt ceiling were still high, meanwhile, the market even breached the uptrend channel which stayed intact for the whole year. As press conferences of both parties indicated that talks should take place in order to reach a solution, optimism slowly creeped in and the market participants started a buying spree which started on a big gap up followed by two days of full green bars. This sequence of events shows us how sensitive is the market regarding these (important) issues, and most important, what would happen if the U.S will eventually cease debt payments this Thursday - an avalanche of economic disasters. Our view (and honestly, much of the market participants agree) is that the debt ceiling will eventually by solved since there is too much for the government to lose on that political play.
So, putting the political problems aside let's check what the technicals are telling us. Plotting the DIG SmartPoints on the chart - A proprietary indicator from the developers of ProTradingIndicators.com - we can see that the market does ranges for quite a while between the two extreme bands. Currently the price has just exceeded the middle, yellow band which indicates some sort of a mean price where if the prices were to go to far from that band, they have a tendency to get back to that yellow band. So for now we are in mid zone, trying to reach for the upper red band at around 172.64, this means we are neither overbought or oversold - price trend is neutral.
As for close support and resistance levels, we will plot the a useful indicator called DIG Pivot Break, also form the developers of ProTradingIndicators.com. Essentially what this indicator does is identify key turning points in the underlying asset, and gives the observer a clear view of potential tussle levels between bulls and bears. Also, this indicator can help in identifying trends, whether up or down, just by looking on the sequence of the extreme dots printed on the chart and following a pattern of higher highs and higher lows for an uptrend and lower lows and lower highs for a down trend. Right now, we can clearly see a white dot printed on mid August at 163.00 which offers us a clear support level. This level is quite important since the next support level is quite distant, about 8 points below 163. This leaves a large empty space where if prices were to go under 163.00, we could see a further drop to 155.00.
As for the next resistance level, we don't have so much choices as we are flirting with all time highs of the market. So the imminent resistance level is 171.00 which is the level where the early August high stopped, and where we experienced a false breakout - last high.

Economic Calendar:

The important economic events and announcements for the week are listed below. Of course, the most important event which i not listed is the debt ceiling countdown to this Thursday, October 17.
Oct             16 @ 08:30 AM - CPI             (Consumer Price Index ).
Oct             17 @ 08:30 AM - Initial Claims.
Oct             17 @ 09:15 AM - Industrial production.
Oct             18 @ 10:00 AM - Leading Indicators.
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