January Trading Trend is set as the market price increased for the first trading week of January.
January’s first five days of trading normally sets the pace for year. Looking at the weekly chart on the S&P500 emini futures for the first five days of trading we can see how the S&P500 hit support and moved up with no sellers really stepping in the way. Presently we are testing the swing highs with support coming in at 1430 and 1400.
Market volume was low in the S&P500 emini futures last week with 5.4 million contracts trading hands. This is low for thee week so we could either see this consolidate at the highs or a retracement to 1427-30. On the weekly this could chop around in the top half of the 50% retracement of this past weeks priced action putting the support from the swing high down about 31 points or to 1431 area.
The Fiscal Cliff which is discussed extensively on News and other media has dampened the investors willingness to buy into the markets as we can see in the dwindling volume.
If we end up in a Doji, where open and closing price are the same (or close to it) for the week, then I would be looking for a continuation this next week. Watch out for low volume periods in the afternoon as this is when Market makers could take out your stops very quickly.
January Trading on the Daily Chart, S&P500 Emini futures.
The daily chart on the S&P500 emini futures is showing weakness on the move to the swing highs.
There is an open gap at 1427.50 from the New Years eve close. This open gap is not to far away so there is a possibility of price moving to close this gap before a continuation in the trend from the first full trading week.
We see support at 1443 and 1432 as well as at the open gap of 1427. If price breaks through these supports, then watch for the sellers to test the 50 moving average and then to the 200 day moving average at 1380. It would not be unusual to see the test down before continuing in the direction of the major trend.
Also note the declining volume on this move up which shows decreasing commitment on the buyers side to keep price moving up.
Remember, although the buyers are moving back into risk positions in stocks and more, you could see a slight sell before the move up. If buyers do take control and push through the resistance at the swing highs, our next short term resistance is 1472.50 then 1485 and then the psychological 1500 which the market is so hungry to see. Just because businesses are showing a bounce from the recessionary levels from the financial crisis we are seeing a decrease in the “family economy” that was built up in the 2002-2006 bull market. The key fixture missing from the recovery is the increase in home prices, which unfortunately will come at the expense of inflation in food and other goods as interest rates have been held set close to zero.