YM Daily Chart.

Last week, U.S. equities could best be described as having good two-way price action for day traders but fraught and worrying for investors. And when considering the three primary futures of the YM, the NQ, and ES, for once all were in agreement on the daily timeframes, so I have chosen the as a representative example.

It was the start of the week that signalled a change in sentiment, with Monday’s upthrust candle standing tall like a flagpole on the top of a hill and sending a strong signal of potential short-term weakness, which duly arrived on Tuesday with heavy volume confirming the strength. However, note on Wednesday, where we had a wider spread than the previous day, yet lower volume, suggesting selling pressure was easing, which was indeed the case with the recovery on Thursday on good volume.

However, it is Friday which is the concern. Note how the volume has fallen away on the widespread up candle. And while it was not an extreme anomaly, the fall-off is a worrying sign, and one that has been confirmed in early trading with weak Chinese data helping to cap further advances for equity markets. For the YM Emini, it’s now a question of breaking through the volume-based resistance at 34,200 for a return to the longer-term bullish trend. And speaking of the longer-term, the inflation narrative is likely to dominate the coming weeks and months, with markets reacting and overreacting to data, so expect to see more of last week’s price action, which is great for day trading, but not so good for the nerves of longer-term investors.

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