Alignment
Expect the first 45-minutes of trading in S&P futures today to be volatile until the market comes into alignment, after we closed on Friday at an 11.00-point premium to fair value.
This morning S&Ps were down 800 at 1393, which is going to be a key area up to 1394. On the upside, we’re looking at 1397, 1399.50, a critical at 1402, which was also Friday’s high, 1404.50, 1405.50 and a major area at 1407.
On the downside, below 1393.50 we have a major area at 1392, 1390.50, 1388.50, 1387.50, 1386.50, and 1383.50-1385. This was the level the market was at around 2:30 p.m. on Friday when it started to rally. Fair value today comes in at 9.00 points above cash.
The NASDAQ was trading down 40 at 3186. On the resistance side, we have 3205-3220, above that look for a move to 3260. We have resistance between 3255 and 3265. Above that, look for a move to 3320. There is very strong resistance between 3295 and 3325. Any close on an hourly basis or at the end of the session above this level is bullish, and should pave the way for a move back to 3600.
On the support side, we have support between 3177 and 3165. If they get below that level, look for a move to Friday’s low of 3133. Anything below 3133 should produce a chance for a move down to 3080. We have support between 3105 and 3095 on the way down. Any settlement below 3080 is extremely negative.
Friday’s trade was very “whippy,” as the market sold off from 3314 to 3133 within the first 90 minutes of trading, only to rally back to 3280. This type of action characterizes indecision, and the most bullish thing that could happen is a tightening of the range, with an upward bias for the next couple of days, followed by a good level from which to rally.
On the bearish side, the market needs to be able to rally from a higher levels rather than just the lower levels.
The Dow was the savior on Friday, rallying 210 points on the heels of the financial stocks. The market now has nearly completed a “V” pattern, and we do expect resistance to step in above 10,600. Look for some retracement over the next session or two.
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