December Rate Hike Looks Likely
The NFP numbers knocked it out of the park, and a December rate hike from almost nothing to slightly more than nothing now looks likely.
For the moment that looks bearish, though a barely perceptible token rate hike from a Fed stuffed with doves is a little hard to take seriously, and may not remain bad news for long.
In the short term I have the move from the high as a falling megaphone and there are three main options here which I have laid out on the chart. From here with the ES low at 2083 the main remaining options are to either break back up to retest the high, or to break down from the megaphone into a target area in the 2040-50 range. I’m leaning towards the bear option with a trend down day, but keeping an open mind. SPX 15min chart:
On the 60min chart the low yesterday was a test of important trend support at the 50 day MA. That has broken this morning and as long as SPX (NYSEARCA:SPY) stays below that (currently at 2095), then the bears have the ball here. SPX 60min chart:
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The bull/bear line for today is the 50 hour MA in the 2095 area. If bulls can recover over it and sustain trade above it then a retest of the high will be likely. If that holds asresistance then I’m looking lower and we may well trend down today. There are significant support levels on SPX around 2080 and 2060. If we go down hard today then I will be looking at the 2060 support area, supported by the 200dma at 2063 and the daily middle band at 2059.