Friday, July 29, 2011

29 July (Fri), Afternoon trade

The futures market made two significant downward moves overnight, first on news that House Speaker Boehner’s debt ceiling deal would not come to a vote that night, i.e. that the Speaker could not secure the requisite votes from members of his party, and second on release of the latest quarterly U.S. GDP statistic (+1.3 percent), which was weak.

/ES, daily bars:

The impact of these announcements pulled the S&P 500 E-mini futures to 1278.5 and ruptured a significant price channel line (as the reader can see for herself above).

Although the afternoon reaction has been bullish, taking the contract not only to 1290 price channel point but beyond to 1300, the bears might not have yet capitulated. The 1274 and 1263 areas – other price channel support points indicated in the chart above – may yet exert a downward pull before the debt impasse is resolved.

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