Bulls Look to Keep Control on Halloween

But the S&P is in a critical zone.

Technical Edge — 

• NYSE Breadth: 68% Upside Volume

• Advance/Decline: 75% Advance 

• VIX: ~$27

On Friday Oct. 21, it looked like the ES was going to roll over and potentially go on to retest the low. Instead it reversed and rallied hard. After last Friday’s ramp, that’s back-to-back “Fry-days” with 2.4% gains. Every Friday this month has had a gain or loss in excess of 2.3%. 

This week is marked by more earnings, a jobs report on Friday and most important of all, a Fed meeting on Wednesday. The Fed will raise rates again on Wednesday — the market is pricing in another 75 basis point hike — but the rhetoric for futures hikes will be critical. 

If some sort of “pivot” language is included, the market will rip. If Powell gives us another round of “Jackson Hole” commentary, well then the October low remains in play. 

Notes: See if oil catches a bid here in the $86 region. Bonds pressured this morning, dollar is up. 

S&P 500 — ES 

Well we got our move to 3850…and a whole lot more! The ES roared up to the key 3900 area on Friday, a level that, quite frankly, I wasn’t expecting to get hit that day. 

As you can see on the chart above, ~3920 is a key level to keep an eye on now. It has not only been a pivotal support/resistance level since June, but it also marks the 50% retracement from the October low to the August high. 

Should the ES clear this area, it opens the door to 4000 and the 61.8% retracement. 

On the downside, I want to see support at 3840. Below that and 3810 to 3820 is key. 

The Trade