Friday's strong rally with some volume seem to be following through as of this morning. However, last Friday was options expiration day. So a good proportion of that volume is expected to be due to that. Additionally, the Asian market was down, except Japan and Australia, last night. This is not a good sign. Hong Kong (-1.59%), Shanghai (-3.67%), and Japan (+2.70%). This isn't good because it shows the world players are not putting in their vote of confidence in this rally.
Furthermore, the hourly e-mini S&P500 still haven't broken its downtrend resistance from 11/04. I would like to see it breaks 814 and remain above 803 as a confirmation to this rally. If ES can break 814/820, then 840 is just an earshot away and would be my first target. If it breaks below 803, then 790 is the first target and then further breaking 780 would be diastrous.
[caption id="attachment_872" align="aligncenter" width="500" caption="e-mini S&P 500"][/caption]
On a positive note, the US Dollar Index finally broke 87.50 as I was waiting last Friday. This is a short term support level and a downtrend in US Dollar is a good sign for the rally. This suggest that sideline money are moving into the US market.
Lastly, precious metals remain the best performers since last week. Gold is still moving up with good momentum. ZG is now up 24.50 overnight to 816.20. The major 800 resistance didn't held it for long. If we can stay above this 800 level, then this is a great sign of the strength to come for Gold. Otherwise, breaking 800 to 793 or so is expected as a retracement. Just so as long as Gold doesn't break 780, this precious metals rally is still good.
[caption id="attachment_873" align="aligncenter" width="500" caption="Gold"][/caption]
: http://traderpau.files.wordpress.com/2008/11/2008-11-24-es.png : http://traderpau.files.wordpress.com/2008/11/2008-11-24-zg.png