The Emini closed up 2.25 points at 1,433.50 on Monday. Range was average today but volume was well below normal at only 0.8 million contracts traded. Having bounced off 1,418 to 1,424 at the end of last week the Emini is now getting ready for a breakout. The Composite Trend Oscillator suggests upwards.
The chart above shows my Composite Trend Oscillator on daily Emini bars. This oscillator is the combined reading of my 4 leading trend indicators: Trading Index TRIN Oscillator, Open to Close Oscillator, John Ehlers Hilbert Sine Wave and the Smart Money Oscillator.
The current reading on the oscillator is -209 and well into oversold territory. This usually signals a low turning point but needs a breakout for confirmation. Any sustained move above 1,436 would signal such a breakout.
Other confirming indicators of likely market strength are the positive Commitment of Traders reading and strong US Dollar versus Japanese Yen.
If we do get an upside breakout how far might it go? We already know that the 1,450 level will offer resistance. Also worth bearing in mind is that Bonds continue to fall and a rounded turning point lasting almost 10 trading days was reached in the Bond market 20 days ago. The Emini tends to lag the Bond market by about 20 days and so we might see a similar pattern with a slow, rounding turning point in the Emini. In addition, the Emini is overvalued against Bonds and the NASDAQ has been showing weakness versus the Dow over the last 3 days.