Weekend look going into Dec 20-21. Last week was very volatile for all the indexes including the ES. The ES was the strongest of the bunch going into the week and managed to tap the ATH after the FOMC meeting on Thursday morning. The move was short lived, however, as price reversed off the ATH sharply and fell for balance of the week closing Friday just above the 55 SMA. The ES is currently trading below the 55 SMA on Sunday evening down 1%. The reason for the drop is a confusing combination of Omicron, BBB disappointment and Fed worries.
Going into this shorted holiday week the ES needs to stay above the top of the neutral zone to continue it's out performance. Below the top of the neutral price will likely test the Dec 3rd low. The 4500 level is key. If price breaks below 4492 the next level is the 4440 which is the bottom of the neutral. Below the neutral a drop to the the Oct low is possible.
The ES is currently the strongest index but has dropped 3.5% since last Thursday. It is now forming a double top right at longer term channel resistance. A break of the Dec 3rd pivot would confirm the double top and likely lead to lower lows. If the pivot holds I would not be surprise to see price trade in a large sideways range going into the end of the year.
Weekly events...
Tuesday.. Biden Omicron speech
Wednesday... GDP & Existing Home Sales
Thursday... Jobless Claims, Personal income, New home sales.
Bull Notes...
Santa Rally still possible
Potential rotation back to small/mid growth
Omicrons fears are overstated
Bear Notes...
Manchin blocked BBB
Omicron restrictions & lockdown increase globally
Fed taper & rising rates
Mega caps roll over
Biden Speech spooks market
Memories of the 2018 Dec sell off linger
