Where We Started …
S&P futures — at 1495.60 this morning — are just above the area where we saw solid buying in the pit last week, between 1492.50 and 1482.50. In this range, we saw big institutional buyers.
The break we had last week was on low volume. And here we are, above where we saw the buying last week. This means we believe we’re confirming the scenario for a rally.
We think 1494 will be a key area today. If we stay above that, our upside objectives should be met. On the way up we see 1497.50, 1500, 1501.50, 1503.50, 1504.50 (major), 1505, 1506.50, and a cluster between 1508 and 1510, which will be a critical area. The ultimate upside objective is 1516.50.
On the way down, we have 1493.50, 1491, 1490.50, 1489.50 (critical), 1487.50, and then 1485.50, which is another major area. Yesterday, we saw low volume, and dealers were on the bid all the way up. Also, we have a small gap in S&Ps between 1521.50 to 1519.
NASDAQ was called to open 20 lower at 3728. NTAP is called to open $7 lower on earnings; should have some effect as it is a leading data storage company. 3810 is still the key, being last week’s high, and then 3843, which is a 61.8% retracement of the move from 4135 to 3370.
These are the key upside objectives. We also have resistance between 3770 and 3790. Any settlement above 3843 is extremely bullish, and should lead to a retest of 4000.
Any settlement between 3810 and 3843 is bullish — but not as bullish as above 3843. We see support at 3735, and then between 3717 and 3690, which is a crucial zone, especially when it comes to settlement.
If we get below that, we see a quick run to 3655-3650, which was yesterday morning’s secondary low. Under that, expect a run to 3620, then between 3602 and 3592.
Dow is now 4.8% above is 50-day moving average. Typically, we would expect this morning to begin to top out and move sideways. However, if the money keeps going after the financials, and the return of the cyclicals — especially in light of Home Depot’s earnings after the close today — this market could move even higher.
Still, expect support to be found — if we start trending sideways — between 11,050 and 10,925. We see resistance between 11,240 and 11,325.
Do you have a follow-up question about something in this column or other questions about trading stocks, futures, options or funds? Let our expert contributors provide answers in the TradingMarkets Question & Answer section! E-mail your question to questions@tradingmarkets.com.
For the latest answers to subscriber questions, check out the Q&A section, linked at the bottom-right section of the TradingMarkets.com home page.