Testing for the bull now. Watch $ES_F 1680 on the upside and 1666 for downside targets

Today's Economic News:

Mixed messages out of Europe today, mostly good though.  In the USA, look for the durable good and initial jobless claims to set the market mood. Can we ever break 300K on those initials? 

Quote of the Day:
It is better to aim at perfection and miss, than to aim at imperfection and hit it
–Thomas J. Watson

Featured Breadth Chart of the Day:

A/D lines have turned considerably weaker with yesterday's selling and today we look to open gap down and that will pin the lines even more.  We are now looking for a sub-50 reading with a test.

Comments and Levels for the Front ES (S&P500 – Emini futures) contract:

Short: 1684
Long:  1666

The bulls just could not get it done with a move above 1695 and the market broke.  Down now almost 1.5% from the highs, too many shorts jumped on board the selling and when it came to closing time, they were swept away in a nasty squeeze.  If we get continued performance today, watch that ATR line tomorrow begin to move above 3.

We are looking at the double bottom area from the 7/16 time frame at the 1666 level.  Looking for a new test there. 

We are seeing some breadth in volume selling.  It could just be position re-jockeying as we head through earning seasons into the year end close strategies.

We are suspicious of snap back rallies as money comes back in to new positions and weak shorts try to make their long awaited profits.

On the MiM

A strong sell signal developed, but the volume in the market never really built up any real selling and we ended up with way too many people short with no relief to the downside toward the close, they were squeezed out. 

That left the shorts bruised as those holding contracts that needed to settle before the cash close had to pay the escalating prices.   If you could have held through the close into the early GLOBEX, by 8:30pm the prices had returned to their pre-squeeze levels and then there was further selling into the night.   The MiM has been calling for a sell off the last 2 days and here we are now down 1% off the highs.

You can review the closing imbalance snapshots at http://closingimbalance.com/snapshots-mim/

Comments about TLT (Twenty year Bond ETF):  

We like the TLT long from here to 109.50 with a stop @ 106.50.

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Breadth Charts in Full :

Zweig Breadth Thrust:

Looking for sub-50 if the bulls cannot recover from this gap down.  Watch that economic news today, durable goods, etc..  

Cumulative Volume Index:

We finally saw some selling, something we hadn't seen really since the end of June.

Number of NYSE issues trading ABOVE their 40 day moving average (40DPI):

Even the 40 DPI took a step back. 

New Highs / New Lows ratio chart :

We still managed to put in 208 new highs.  That is not bad.

Trenders :

Short Term Trender -  McClellan Summation Index:

Remains bullish:

Long Term Trender -  Cumulative 4-week Highs – Lows (the fat lady):

Bullish.

Thank you for Reading –
Marlin aka RedlionTrader @redliontrader

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