The following Commodity Futures Market Analysis is the opinion of Optimus Futures.
S&P 500 Index
Emini S&P 500 index futures showed more signs of exhaustion from the bulls this week as the long term steep up trend slowly transforms into more choppy and sideways market action.
Even though price was able to post a new high for the week, pullbacks were frequent and down to the lows around 12563 region. Notably, price has been able to bounce off of temporary pullbacks thus far but the lack of authority from buyers continue to post a strong case of perhaps an impending major correction into the long term up trend.
On the higher time frames, the dragging price action translates into bearish divergence as indicated by higher highs from price matched by lower highs printed on the RSI 6 period indicator.
While we do not believe this to be the top of the market, we do anticipate a major correction into the trend. We expect price to continue the sideways movement into the following week, potentially targeting the 2600 round number region eventually to seek major sell side orders. As of now we don’t have a directional bias on this market although we do anticipate a move up to 2600 in the following weeks.
Light Crude Oil
Light crude oil futures for December delivery contract finished the week higher again as the bullish momentum continued to fuel the current up trend. However, the proximity to long term highs meant that price understandably moved higher for a short period during the early week and spent the latter part consolidating under the crucial highs.
We like the bullish momentum so far but will be cautious taking on a long bias for this market under critical long term highs. The following week could see a pullback on the back of selling coming in, but we do expect price to likely push even closer in on the highs for a real test. For now we are still on the sidelines with this market.
Gold futures for December delivery contract this week disrupted the bearish tone being set up in the prior week as price posted another pullback off the 1266.00 level.
The break under the support trend line proved to be a false one as buyers came in again at the 1266.00 level. Price spent bouncing and oscillating at and above the 1280.00 highs in the latter half of the week
We did get a strong bearish close for the week on Friday, and while this market lacks any obvious direction, we do want to take note of the longer term major support trend line shown below. We anticipate an eventual movement further down to test this trend line. A break of that trend line and the major swing low at 1263.00 could help initiate and sustain a strong bearish move in the following weeks and months.
Euro Currency Futures
Euro futures for December delivery contract proved to be disappointment for the week for the sellers in particular. With some major short term price movements to the downside and the break of the obvious head and shoulders pattern on the higher time frames, we have held a short bias on this market for the longer term.
And while we still hold on to that bias, we have to note yet another correction as price retests the neckline of the head and shoulder pattern. If buyers continue taking over the market early next week, we could possibly see price retesting the 1.17 Round number S/R flip and neckline of the head and shoulders pattern.
We note that a pullback to that area will also fall in confluence with the resistance trend line possibly creating a point of interest for sellers. We still anticipate a longer term target of 1.14 for this market.
10-Year US Bonds Futures
The 10 year treasury note market was one of the most interesting markets to follow this week as we noted some textbook perfect price action unfold on the market.
Price opened the week just shy of the highs around the 125.25 price level. The initial trading sessions saw price drag toward these highs – also falling in confluence with the longer term resistance trend line – hold perfectly and reverse right off for a strong bearish move for the remainder of the week. Through this movement down, we only noted minor and temporary support just above the 125.00 level, as price eventually closed in strong at the 125.45 S/R flip.
Given how price behaves in the first couple of trading sessions the following week, we may see a bounce off of this level, or an eventual push down to 124.10 lows or regions beyond.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.