Playing Field $SPX $SPY $ES_F #market $$

The S&P500 lost more than 40 points during the week The marrket is still driven by “headline” risk deriving from Europe and everything points out to another volatile week. Spain celebrated elections today, and seems the conservatives have gained the elections.

So far, Euro still in range (at the time of writing, 10:30PM, ET) 1.3560-1.3500. The S&P500 futures have opened this Sunday with an 8 point gap down, which have not yet recovered.

Longer term, the candle closed and is almost resting in a flat lined 20EMA (monthly), following 3 weeks of radical chop. As noted during previous inflection points, the change in trend usually comes preceded by several months of indecision. Thus, the period of 2001-2002  took 2 months for the initial push down to become a trend. 2007-2008, 5 months, and 2010-2011, almost 12 -depending if you consider it one or two stages. 

However, since the chart is showing we are facing a possible inflection point in the S&P500 for the intermediate-longer term trend, I find it useful to review it, in order to get a brader view on regards to where are we currently sitting.

Spxlt

The daily view of the SPY shows last week declined. It closed aty 121.98, jus a tad below the 122 level – These are not arbitrary levels. They have been tested and have “contained” the move for almost a month. The area marked with the circle  -aprox. 120.80/119.20- seems to be in the cards. To the upside, 122 // 124 // 126.40 are my short term resistance areas.

Spxst

My short term view: tonight´s open (gap), has “cleared” some of the long positions entered back around Friday@noon, which so far (at the time of wirting) has been holding. The long positions entered tonite, will have to be respected and maintained if I want to see further strenght develop in the market, as pointed out in the chart below.

Loi

Levelwise, the chart below shows the areas of support and resiatance I´ll be watching. SUpport in BLUE. resitance in RED.

Sr

Last week, I pointed out that I was leaning towards a year´s-end rally. I´m still somewhat favoring that scenario, although I´m even more concerned about the possibility of it duew to the critical position that the longs are into at the moment. In the chart below, you can see how the (negative) divergence bewteen price and orderflow showed that the gain in price was not accompained by commitment towards long positions of market players. Thus, the cauntion on the long side, as originally posted. This week I´m even more cautios, mainly due to the reason that we are facing “critical” levels of long commitment in therms of positions held. You´ll see in the chart below, that the Cuulative Delta is showing several level of commitment in terms of long positions. For exmaple, currently we can see that the downmove is testing the commitments of those longs initated at 1165 aprox. on or near late Sept./early October. If that happens, we could see further upside, geared towards the green line, which are the long positions intiated in early september around the 1150 level. That level is followed closely by those long positons initiated at the 1145 levele, aprox. Thus, if some more sustained downwards/selling pressure comes into the market, the risk of downside is increasing. 

Alternatively, the near level for the the market to regain upside are the shorts positions initiated on Friday, around the 1230 level, which are at a reasonable distance. If that levele is breached but upward momentum, then I´ll be watching how the above leevels  (1235-1240-1260) of short commitment hold the upward pressure.

2011-11-21_0117

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