Between the Gaps $ES_F $SPY $SPX $$

The rally scenario, turned out to work out. The SPX closed up almost 3% @1192.55.

Currently, the index is contained betwwen 2 10 point gaps, as noted below. 

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The SPX futures, managed to surpass and mantain Sunday opening print which currently (8:50PM, ET) is holding. My impression is that the expectation out there is that this might be the time for the Xmas rally to come. 

2011-11-29_0109

Although I´m still keeping the bias of the possibility of an end of the year rally, there a few points today. Low volume day: Almost 20% below the 3-month average. It is also important o note that the rally was NOT supported by the initiation of long positions. Asposted in the chart below, the previous level of long inventory was taken back last Friday. Although to this point it doesn´t matter for my analysis, I have left it on purpose in order to illustrate the low levels of new positions.

I´m working here with 2 diferent scenarios:

a-) The last level of long inventory gets respected during tomorrow/the next few days and the high levels of short inventory above start to cover their positions, thus creating a short cover rally. How long will that last, it is impossible to tell.

b-) Aternatively, the new longs that initiated their positions last Sunday cannot hold, the level gets taken out and the ES will probably fill the gap and possibly make new lows.

2011-11-28_2339_001

 

Levelwise

* 1169.75-1172 mayor support

* 1181-1183 as support (weaker one)

* 1201.75-1199 (resistance)

* 1207 – 1209 (second resitance)

2011-11-29_0026

 

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