Low Volume, Low Volatility, Higher Highs, As Expeceted

The year has begun much as anticipated with low volume and small price ranges throughout the markets. Price continues to churn upward, even if the pace is gradual and the gains minimal. This morning marked the largest price move relative to time (ES jumped 8 points in 30 minutes on new jobless claims data) that we have seen since the first trading day of the year.

Since 2013 began with a gap-up across most markets, the ES has been consolidating in a slight upward trend making higher highs (highest prices since 2007). I expect continued higher highs before the markets eventually turn down to test the 2012 closing prices.

ES (March Contract): up-trend denoted by yellow lines. Previous multi-year highs denoted by white lines.

You can see that with today's rally, a potential short opportunity is presenting itself. I like shorts in the 1480-1482 price area (potential for a pierce higher). You could look for a move back down to the bottom of the range, but I'll probably look for about 10 points on that short.

Consider long entries on a pull-back to the 1468-1472. From there I like the up-trend to continue and will expect 1490 ES (H March Contract)

So my bias remains bullish and I favor buying the dips. My bullish bias will change when we see another wave of fear enter the markets.  This will happen when debt-ceiling talks command attention once again (at some point in February).  Any contention between congress and the white house will result in at least some short-term selling across the markets. This is likely what will bring index prices back down to test the 2012 closing price levels. I will talk more about this in due time.