We’re rolling into the September 2009 contract and all charts will be in such (until Dec 09 becomes the front month).  We do note, however, that for the sixth day in a row, the June 09 contract closed within in a 4 point range (and below the 942.75 Jan 6 2009 high).  Closing for 6 days within 4 points has only happened 5 previous times in the history of the futures contract going back to October 1997 (no occurrences prior to August 23, 2005), with 4 of the 5 times resulting in declines upon the break of the range, and only one of those declines being severe (see below).  We mention this mainly as a curiosity and a warning that any break of a consolidation can result in a large move.  We believe the financials will lead and are still monitoring the Nasdaq bank index and the XLF financials ETF, both of which stalled at resistance today.

The other dates matching the criteria are (chart below):

Aug 23 2005
October 11 2006
November 23 2006
February 22 2007 (largest point spread over following 3 days = 69 pts)
April 8, 2008

In the Sep 09 contract, the close at 938.00 is also a 50% retracement from yesterday’s lows.  932.75 should offer support and 940.00, then 942.50, then 948.25 should offer resistance.

If the below banking indexes can punch through resistance, we should see a good rally to new highs in the ES.  Longs can enter at 950.50, then 946.50.  Below 944.25, we get bearsish.  NYSE adv:decl ratio has petered out around 2.0.

Thanks to friend Billy for pointing out XLF is close to its 200 day moving average (yellow).  As this is a 60 min chart, we are using a 1400 period MA (200 * 7 hours / trading day).

The bullish scenario in our morning report that could enable the markets to propel to new heights has so far unfolded, with no early weakness and a test of daily R1 (high of 950.75 as we write).  To demonstrate they are in control, bulls need to defend the 50% retracement at 943.75 off the overnight low to day session high.  940.75 and 939.00 are also 50% buy areas, below which we are bearish.  Aggressive shorts can fade this rally at 948.00, but we would not hang around if we see new highs.  Market internals are slightly bullish, with NYSE advance:decline positive, but not aggressively so, and volume below average relative to the last 10 trading sessions.  The latter, however, is likely due to contract rotation into the September 2009 contract, which has slightly less today than June 2009 as we write.

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