Shifting Gears

Happy Halloween. Index futures are up. The market’s first full day post-QE turned out to be a successful one, with all the indices up more than 0.5% on the day, and the Dow over 1% thanks to Visa.

That doesn’t mean there wasn’t any jitteriness. After a weak open, the S&P 500 found its footing, rallying up to the 1999 level. Then, in the afternoon, somebody or something hit the sell button, and held it down.

S&P 500, 3 minute bars

S&P 500, 3 minute bars

The index recovered most of the afternoon retracement, and closed higher on the day. But the near retest of 2000 demonstrates the need for a real fundamental catalyst to make the break above those psychologically significant levels.

SP-50030minute2014.10.30

S&P 500, 30 minute bars

Stepping back to the 30 minute chart, we can see clearly the inflection point in the rate of advance off the Oct. 15 lows. Despite the deceleration as we crossed the neckline from the descent off of the Sept highs, we still maintain a brisk and consistent path higher. Only a break below 1980 would give cause for concern for a channel break.

S&P 500, daily bars

S&P 500, daily bars

Taking at look at the daily chart, its clear the general support line of this trend has the potential to take us back above the all time highs of 2019. Judging by the futures this morning, we may even get there today, as Japan ramps up their QE program. Above the all time highs, upper trendchannel resistance will be our primary guide for gauging overbought levels if and when we continue the rally.

See you at the open.

-Will Mogey (Twitter: @wtmogey, StockTwits: @wtmogey)

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