Another gap up open–watch the first hour $ES_F 1784 x 1758

Commentary, E-mini S&P 500, MiM, News

Featured Breadth Chart of the Day:


Today’s chart of the day is the Up/Down volume chart.  We look for 9:1 signals on these charts to help gauge exhaustions and turning points.   The salmon vertical bar toward the end of August was a 9:1 down day that helped mark a bottom.  The cyan bar in October was a 9:1 up day that was a starter’s pistol for the move up to the current highs.

With this pullback we are in bearish mode and looking for either of these signals to help mark sentiment turning points.

Economic News:


Decent numbers out of the Eurozone.  We are handing out a free pass for the PMI service sector that had previously been stronger.  We like the trade balance and the stronger manufacturing PM numbers.

In the USA for today it is about productivity, the NY Empire index and the manufacturing PMI number, all coming out pre-market.

There has been plenty of volatility overnight and I would expect that to move into the first hour of trading.

Quote of the Day:
No one can be free who does not work for the freedom of others.

Comments and Levels for the Front (S&P500 – E-mini futures) contract:

Short: 1784 (March 2014)
Long: 1738 (March 2014)


The overnight session took care of our 1758 need and we are now nearly twenty above as budget deals are fueling pre-market speculation.

We still think the sell is on, as indicated by our nightly MiMs, and despite a thinner market reaction we like 1784 as a place to look for a short. Should be follow-through on the open to reach that level.

The open will be interesting as either buyers decide they do want to return, those caught short over the weekend recover, or sellers decide that a good news spike is just too good to take advantage of.  Either way, the dust should be clear after the first hour and we should have a better idea of who has the controlling handle on the market.

Should 1758 give, we like 1748 to the downside.  I don’t think it is going to be a narrow range today, so trade light or keep the stops tight.


On the MiM:


We are halfway through December and already six signals on the MiM so far this month.  Friday’s MiM gave us a marginal entry signal at 3:00pm (remember for December I am trading just a 3pm ET entry if we have a signal and holding to the close).

We saw that 3pm signal evaporate just going into our 3:20pm to 3:30pm windows only to return stronger by 3:40pm and into the close.  It added almost two more points to our monthly tally.


Date Of Signal Direction x:00 Entry/Close x:20 Entry/Close x:30 Entry/Close
12/2/2013 Short 5.23 4.63 1.94
12/4/2013 Short -0.36 -0.17
12/5/2013* Short -1.51 0.11 0.33
12/6/2013* Short -0.76 -2.07 -2.24
12/11/2013 Short 4.71 2.62 1.85
12/13/2013 Short 1.76 -N/S- -N/S-
Total 9.40 4.93 1.71

* – NFP Day before and day of.

If you want to join the meter readers you can go to: Join the MiM

Comments about TLT (Twenty year Bond ETF):


We remain stuck in the middle with an upper level at 104.25/104.50 and 102.25 on the downside.  We are bearish in our outlook and expect 101 before the end of the year. 

>>> You can follow me on Twitter  @redliontrader <<<<<

Breadth Charts in Full:

Zweig Breadth Thrust


Fifty is the key level here to reverse the Zweig trend.

Cumulative Volume Index:


Selling has stopped for now.

Number of NYSE issues trading ABOVE their 40 day moving average (40DPI):


For the bears, it is a bit frightening that we have all this sub-40 DMA kindling lying around in the brush.  We can go lower but we are starting to squeeze the broader market already.

New Highs / New Lows ratio chart:


Watching for a bounce here … bulls want it back in the 90s.


Short Term Trender –  McClellan Summation Index:



Long Term Trender –  Cumulative 4-week Highs – Lows (the fat lady):



Parting Shot: 


While the rest of the world debates the skin color of fictional character Santa Claus, I find it important to reflect on the true, the here, and the now.

We had our first real snow this weekend and temperatures  are plunging into Arctic-like ranges over the next few days,  and we are going to see minus signs in front of the numbers (and we aren’t talking about Celsius here, my metric friends).

It is going to be a long winter, I can feel it…  but that is what it is all about, right?  Touching it, smelling it, tasting it and feeling it and not about making up some crazy debate.  If I could just find that truly universal remote controller I would shut it off for all of us.

Thank you for Reading –
Marlin aka RedlionTrader @redliontrader

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