Market Battle Tightens Down

Pre-market futures were down strongly this morning indicating that the tightened trading range from yesterday was going to tip to the Bears and the Dow was going to roll back down to the 8,700 area. But the Personal Consumption/Spending economic reports an hour ago appear to have come in much less catastrophic than expected and the SPX futures popped back up to the zero line.

It also looks like the world-wide coordinated effort by Central Banks to cut short term lending rates is having a positive psychological effect on global markets. I don't know if I've ever seen so many other countries cut their rates so closely on the heels of the U.S. Fed cutting rates. Usually other nations wait as long as possible because they are net exporters to the U.S. and they want to keep the value of their own currency as strong as possible compared to the Dollar. The quick cuts mean the foreign economies are much more focused on staying stable right now than they are focused on exporting to America.

The net result of everything this morning is a flat SPX at the open. That means you will want to keep an eye on the NR7 (Narrowest Range in 7 days) from yesterday and see which way we go. A move outside the two-day, very short term diagonal lines means a move to the short term horizontal blue lines, and a move outside those lines leads to the next move towards the next horizontal support or resistance lines.

Here is a chart of the Dow showing the battle within the battle within the battle:
(click on image to enlarge)

As always, we shall see what happens today.....

11:40 am MT: The Dollar is up as expected. I stated last night in the webinar that the Dollar Basket Index threw a Hammer and was most likely going to bounce, which was going to consolidate Energy, Gold, and Commodity stocks. The ongoing overseas rate cuts has facilitated the Dollar bounce and Energy and Commodity related stocks are seeing a little profit-taking today.

The very short term diagonal trend lines on the Dow broke to the upside and the market immediately traveled to the blue horizontal resistance line. About 15m ago the Dow popped through that line and it's now testing the break of the blue line. This is the point we find out if traders really want to get long ahead of the weekend ahead of the election. My guess is that this is an area to be a little cautious, however, an intra-day bounce is an intra-day bounce (if we get it in the 9,350 area. We shall see if the Dow is going to bounce and head towards 9,800.....

I warned last night in the webinar that if we are hanging out in the 9,400 area in the last 30m before the close to watch your backs. We could possibly get another one of those last 10m of the day fades like last Friday that coincidentally takes us back down below the technical breakout and closes the market in the red.

So far though, the chart construction is bullish, and the 5m charts are in a Bull Flag. It's worth a look, just remain nimble between here and the close.