Today we are trapped in a fairly tight range and I am still waiting for a break out before trading. The range is now tighter than over the last couple of days and seems to be compressing and coiling. The daily chart and recent stalling in price action suggests plenty of supply and perhaps a break to the downside, but I will wait to see which way it wants to move. If we break above the 9300 level I will consider a long and if we break below the 9100 level I will consider going short.
We wanted a catalyst to burst through overhead resistance, we got that. We extended as high as mid 94xx before retracing almost completely and settling somewhere in the middle. Intra day on the 5 minute chart I have a sell signal, 30-minute chart looks bullish, 4-hour chart I still have a buy signal and the daily chart is clearly bullish too.
Commentary: we have breached Friday’s value area low and have started the descent again towards the deviation low after piercing it earlier today. There is currently disparity between SPX and DAX perhaps because ECB are currently caught in between two major monetary policy decisions Fed vs BoJ who are on two opposite ends of the spectrum. But looking back over the years, the last two trading months of the year tend to be fairly lucrative for investors as companies look to squeeze out maximum value from the share prices for reporting purposes.
Germany is facing a “week of truth,” said equity strategist Carsten Klude of MM Warburg. Everything revolves around the question of whether the weak economic data for August due to the late start of the school holidays was only a blip, stressed Klude. A stream of economic data and corporate balance sheets will keep the equity investors in the coming week breathing.