Charts of the futures are confirming the difficulty with trading the past few weeks. That markets have been sideways and filled with false breakouts.
Most of the charts have some SHORT BIAS to them, however bonds are coming into resistance and might be due for a pull back, at the same time many of the futures markets are coming into support levels. Pullbacks don't last forever and neither do rallies.
I would be cautously short here, as I don't think we are basing quite yet. I'd expect a quick drop and then a rally this week. Remember last week was options expirey and many of the charts pinned around specific levels.
If you are unsure of what 'strike pinning' is, you can read more here: http://en.wikipedia.org/wiki/Pin_risk_(options). OR you can do a google search for 'options pinning'. Quick and short, its a by product of market makers reducing risk , therefore making the most options possible expire worthless.
I'll be watching the currencies this week, the Euro (/6E) is coming into some good support and the USD (/DX) is chopping around a resistance area. Any debt worries about Eurozone defaults have the potential to push our markets lower as it will give a boost to the value of the USD. I'd be carefully watching the 1.40 to 1.38 level on the Euro (/6E). There is some potential for a double bottom at the 1.40 area.
Commodity plays in stocks like MCP and PCX should be interesting. Also the pending investigation by the US into Goldman Sachs (GS) will give some volatility in the financials which have been beaten down lately anyway.
As always trade only with what you can afford to lose, follow your plan, and obey your stops. If you don't have a plan then you will lose, so get one. See you in the Virtual Trading Floor.
Chart are below, click to open a fullsize chart in a new window.
/ES S&P 500 Emini
/NQ Nasdaq Emini
/YM Dow Emini
/TF Russell Emini
/GC Gold Futures
/SI Silver Futures
/ZB U.S. Treasury Futures
/6E Euro Futures