The Emini closed down 1.75 points at 1,546.00 on Monday. Volume and range were both well below average today at 0.8 million contracts traded and 7.25 points respectively. The gap left between Thursday and Friday has still not been filled.
The chart above shows the Composite Trend Oscillator. This indicator combines my favorite trend oscillators (TRIN indicator, Open-Close, Smart Money Index) into a single indicator. Today’s reading was +144 and shows the Emini is overbought.
We’re at a critical juncture in the market. Friday’s high was less than the high made at the beginning of June. In addition, Friday was a high Volume Churn day, showing profit taking. Crude oil has broken above $68 and the Emini is overvalued against the Bond market. All bearish signs.
However, on the positive side, the latest Commitment of Traders Report shows Professionals are still long and the strong US Dollar versus Japanese Yen shows foreign investors have been buying into US markets.
The Emini seems trapped between closing the gap at 1,542 and touching June’s high at 1,559. My best guess is that we’ll need to see some form of blow off volume before the market starts the next downward leg.