Is Santa’s Rally Running Out Of Steam Even Before It Begins?
Anna Coulling | Nov 24, 2021 12:30AM ET
It’s certainly a question many will be pondering ahead of a holiday-shortened week of trading in the US, and certainly following Monday's price action across all three index futures of the YM E-mini, the NQ E-mini and the ES E-mini, the warning was clear on the daily chart.
Here I’ve taken the NASDAQ 100 as this has perhaps been the strongest of the three and on many occasions over the past twelve months, led the way higher, while the Dow Jones and S&P 500 remained laggards, or even moving counter, but Monday was one where all three indices were in agreement.
Monday's candle for the NQ E-mini closed as a wide spread down candle on high volume, but it is the wick to the upper body which is perhaps the most worrying and essentially confirming the short-term weakness which is now apparent.
What actually occurs on such a day is the price moves higher driven by those arriving late to the rally driven in by a fear of missing out. The market makers are selling into these buyers but profit-taking repeatedly knocks the price back off the highs of the day and once the buyers have been exhausted the sellers and market makers move in.
So it is a strong signal the market is resistant to higher prices and certainly on this level of volume indicative of the market makers selling into weakness. So far in early trading, we have seen the indices attempt to regain their positive momentum ahead of the Thanksgiving holiday on Thursday, as markets do like to end on a positive note at this time of year.
However, we do have some key data releases coming up including preliminary GDP; but much will depend on a number of key fundamental releases due over the next two days. These included the Flash PMIs that came in yesterday, while today we have Preliminary GDP and the all-important PCE data set which is the FED’s preferred metric for inflation.
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