Volatile session

We got the bounce yesterday and a pretty strong one at that. Now the big question is "Are we headed to new highs ?". The Nasdaq MCO had a small change day yesterday and the NYSE MCO was close to a small change (not strictly speaking) day. Whatever direction the indexes breaks today, needs to be respected. Today will more likely be a volatile whipsaw session and the range expansion will most likely occur on Monday.

I am betting on new highs for all the major indices. The ES futures dropped to 1527.25 overnight and are bouncing back now. Critical intraday pivots are NQ 1950.50 and ES 1523.25. If we break below that today, bears will have won the battle. Above those pivots, the BULL rules.

I don't quite trust this decline !

Last time i commented, i expected a deeper correction and a trip to zero line on the NYSE MCO. Although i expected this decline, the decline on SPX in particular went faster and deeper than i expected. My 120-min did went into a sell this morning and is in a oversold condition right now.

Take a look at the NDX and SPX charts above.

The daily range on the SPX today was nearly 25 points and the daily range on NDX was a mere 26 points. In percentage terms, SPX had nearly twice the range as NDX. What the heck is going on ?

Look at the MACD on SPX and NDX - SPX had a backkiss, while the NDX still remains on a buy. Again what the heck is going on ?

Also remember the CCI on SPX never reached a overbought condition before turning down and is now right near the zero line support. I don't trust at this point that this is the beginning of the next leg down. This should end up as a short term pullback. The next expectation should be new recovery highs on the SPX.

Corrective action

There's not enough clues at this point to determine whether today's action was distributive or not. But as the correction takes longer time here, there's the risk of 120-min rolling over. So far the 120-min is still on a buy signal and i will post an update if that changes. We had very narrow range movements on the NYSE and Nasdaq MCO, but not close enough to call it small change days. Nevertheless that narrow range and the fact that the MCOs have hooked down means a trip to zero line on the MCO is likely. So my guess is that the correction has a little bit deeper to go before the assault to new highs is made.