Buzz-saw Action In The S&P 500!

Posted Friday, December 1, 2017 by
Shain Vernier • 2 min read

It has been an interesting day for the U.S. indices and the very definition of “whipsaw” market conditions. As I mentioned in an earlier update, the Senate vote on the Trump tax plan has hit a snag, giving markets reason for pause. It is now coming across the wires that ex-Trump administration aide Flynn has decided to cooperate with federal investigators in the Russia-election probe.

These two news items have the S&P 500 and DJIA in a furious game of tug-o-war. After a muted open, U.S. indices tanked on the Flynn news, and are now posting a comeback.

Charged news cycles move markets, it is as simple as that. Implementing risk controls and a live news feed are all we can do to protect ourselves.


S&P 500 Technical Outlook

Who knows what is going to happen next? In my estimation, very few. But the market will figure things out, just give it time.

S&P 500December E-Mini S&P 500 Futures, Daily Chart

Today’s range in the E-mini S&Ps has been huge, 149 ticks. A few observations:

  • The whipsaw action to the bear has undoubtedly taken out a bunch of position longs. There were a high volume of stops run under yesterday’s low.

  • A test of November’s 38% Fibonacci retracement has failed, with buyers protecting this level staunchly.

  • The December E-mini S&P futures contract has traded with enormous volumes, nearly 2 million for the session.

Bottom Line: The U.S. indices are chaotic right now. It would not surprise me to see the S&Ps end up closing positive for the session after a wild ride. As of now, the picture is unclear, which makes it a no-fly zone for this trader!

If you have made some money in this market, well done! If not, remember that next week is always the best week.

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