One of the greatest fictional characters ever created was archetypal fictional detective Philip Marlow, so wonderfully portrayed on screen by both Humphrey Bogart and Robert Mitchum in one of the greatest of his stories, The Big Sleep. Indeed it was Chandler himself who once famously described Marlowe in the following terms:
“He must be a complete man and a common man and yet an unusual man… He is a lonely man and his pride is that you will treat him as a proud man or be very sorry you ever saw him. He talks as the man of his age talks, that is, with rude wit, a lively sense of the grotesque, a disgust for sham, and a contempt for pettiness.”
Such a pity that some of these characteristics were not in evidence yesterday, with the prequel to The Big Sleep being The Big Yawn, which best describes yesterday’s events. Anticlimax would be an understatement, as both the BOJ and the Fed delivered the usual meaningless rhetoric, with the BOJ tinkering with the yield curve and the Fed sitting on the fence.
How quickly we have shifted from four rate rises to one, and a rerun of 2015, with another December face-saving hike in prospect for the US.
However, whilst it was a yawn for many, for some it was a wake up call. Equity markets sparked to life on the joyous news.
The NQ emini led the way once again, closing yesterday’s session with a wide spread up candle on excellent volume, and confirming big player participation. The significance of yesterday’s price action cannot be underestimated, with the close at precisely 4,850 on the day, taking the index well clear of the ceiling of resistance detailed with the blue dotted line in the 4,820 area.
This level has been developing since early August as the markets awaited some clear signal from the Fed, although clarity is not something we normally associate with Janet or indeed any of her predecessors. Indeed, it was Fed Chair Greenspan who famously stated, ‘If I’ve made myself too clear, you must have misunderstood me’.
However, with this month’s meeting now consigned to history, equity markets and the NQ have taken this as a positive signal with this sentiment continuing in early trading, with the index currently testing the 4,866 area at time of writing. The ES and YM eminis are following suit, but from a technical perspective it is the NQ which is leading the US market once again.
With the very strong platform of support now in place below, coupled with the volume point of control anchored in the 4,780 area, the longer-term bullish trend looks set to continue. Could be there's a Santa Claus rally now waiting around the corner.