With the summer holidays now a dim and distant memory, overshadowed for some with the extreme volatility which rocked the markets, September has breathed fresh life and optimism into US equity markets which have shaken off the summer woes and reinstated a more measured and even pace higher as risk on sentiment builds, and is reflected across the markets. As always it is interesting to compare the performance of the three sister indices on a daily timeframe with the futures for the YM, the NQ and the ES emini contracts and whilst all reflect the change in sentiment, there are subtle differences.
The YM (Dow 30) has continued higher with six days of straight gains, closing higher on each, with yesterday’s candle ending on a wide price spread and racing through the low volume node on the volume point of control indicator in the 27,000 area on solid volume. However, more sustained volume now awaits between the current price of 27,105 and 27,200 which may hinder progress, yet there is little in the way of price based resistance on the accumulation and distribution indicator with the minor level at 27,000 breached ( the red dashed line) in trading yesterday. Note the trend monitor indicator which has transitioned to blue and confirming the move higher.
Next is the NQ (Nasdaq 100) and here we have some significant differences. First, the index has struggled over the last few days, closing lower on two occasions, but with the buyers stepping in on the second of these on high volume confirming bullish sentiment remains intact for the index. Second, this index is battling through heavy volume on the volume point of control histogram and in addition has an extremely strong region of price based resistance as denoted with the red dashed line of the accumulation and distribution indicator at 7,888 which has been tested several times, more recently yesterday. However, once breached this will provide an excellent platform of support to a continued move higher. Once again the trend monitor indicator confirms the bullish picture.
Finally to the ES (S&P 500) which paints a similar picture to the NQ, with two down days drawing in the buyers, before yesterday’s wide spread up candle testing the 3,000 level, and the minor price resistance which is immediately ahead and denoted with the red dashed line. Here too we have sustained volume on the volume point of control histogram, so plenty of volume will be required to drive this and the other markets through to their recent respective highs and out into new high ground in due course as a gentle September breeze replaces the storms of August.
And all of this is reflected in the VIX which continues to slide lower, down to 14.62 at the time of writing, and with plenty of clearance before it plumbs the lows of single figures.