Rolling Along
The movement we’ve seen in the last couple of days is typical of rollover. We’re anticipating the S&Ps may go down and test yesterday’s lows. It’s precisely the kind of movement we need to spark short-interest.
This morning,
S&Ps were trading down 400 at 1525, spurred on by some weakness in European markets. On the upside today, 1524 and 1525 is the first key area, then 1528, 1530.50 (yesterday’s high), a key at 1532, a small at 1533, a key area at 1535.50, 1537.50, and a major at 1538.50.
On the downside, we have 1522.50, 1519.50, yesterday’s low of 1518.50, 1517.50, weekly low of 1515.50, and a major area of 1513.50. The market could see a spike down, which we would view as a potential buying opportunity.
NASDAQ called to open 10 handles lower at 4005. In general, looking at yesterday’s action, most of the buying occurred in the first 90 minutes. From there, the market flat out held its gains.
We have been talking about the fact that we were oversold on a very short-term basis and looking for a bounce. That bounce came yesterday — albeit on relatively low volume.
Moving forward, one key will be if the SOX can find support levels. If it can find support, the market may have made a higher low on daily charts. If it fails, we would expect, eventually, the 3600 area to be tested on the NDZ.
Keep in mind, we fell from 4210 to 3910 in two days of trading. At yesterday’s high of 4034, we recovered 41.4%; 50% is 4060; 61.8% is 4095.
For today’s trade, 4005 down to 3985 is a large band of support. Below this level, look for 3945. Along the way, 3960-3955 will provide some support. If the market trades below 3945, look for all of yesterday’s gains to be given back, which would take us back to 3921. Failure at that level should lead us down to the last leg of support between 3905 and 3890.
We see resistance between 4015 all the way up to 4035. The market failed numerous times in the afternoon around the 4030 area; expect this to be tested. If we hold above this zone, 4060 comes into play. Above that, we target 4095. Along the way 4085 up to 4100 will be resistance. Above 4100, we see 4120 to 4130 as resistance.
Dow closed back under 11,300 on the cash, and we continue to see sideways-to-downward action in the index moving forward. Support should be found between 11,050 and 11,000. On the resistance side, we see 11,350 all the way to 11,425. Any settlement above 11,425 should signal an upside breakout.