Index Futures Trading: Reversal? 2012-02-21,
e mini futures trading.

This commentary is follow up to Index Futures Trading 2012-02-10. We will look at daily e mini futures trading charts for the S&P; 500, the Nasdaq, and the DJIA (Dow Jones Industrial Average).

S & P 500

First, let us observe the daily e mini futures trading chart for the S & P 500.

Here we are observing two major phenomena. The first is that there continues to be an MACD divergence occurring between the MACD histogram and the price. In fact, the MACD histogram is into negative territory. The second, is that we see at least to clear distribution days. One more distribution day and we are into serious warning territory.

Nasdaq

Second, let us observer the daily index futures trading chart for the Nasdaq.

Here we are seeing the same waring signs as with the sp500. We can see the MACD histogram diverging with price. It is not quite into the negative but it will be very soon. We also see the same two distribution days. We also see that prices are starting to not make noticeable new highs for three or so days.

DJIA

Third, let us look at the daily futures trading chart for the DJIA.

Again, we observe the same symptoms as with the sp500 and the nasdaq. In this case, we see an MACD divergence in both the histogram and the MA's (moving averages). We still see the same two distribution days.

Conclusion

In all three cases only two distribution days were noted, but both occurred in the last 10 days. There could have been other previous distribution days pointed out in the last 30 days, but they were ignored here. What is all this information telling us? We should be careful about how we proceed over the next few days. Momentum for these strong up-trends maybe running out. Caution would definitely be a virtue in the upcoming days, especially if today or tomorrow turns into another distribution day.

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