A Day To Scalp
As the S&Ps continue to be dominated more by news than by technical, we expect this to be a day for scalping. We’re looking for the same sort of trade today that we’ve seen recently: one direction in the morning and then reversing in the afternoon. Again, it’s probably best to scalp in this kind of environment until we have PPI and the other major news events behind us.
This morning, S&Ps were trading at 1504.70, up 1000, bolstered by reports of PaineWebber being purchased by UBS and Yahoo’s stronger than expected earnings.
S&Ps will remain bullish as long as we stay above 1499.50-1500. Our upside targets are 1505.50, 1507, 1509, 1512.50, which is a critical number, and 1514.50-1515.50. We have a major objective at 1518. 1504 is going to be a critical area, then 1500, 1498, 1496, 1495 and 1492.
We see 1488 as a critical area, from which we bounced yesterday. Under 1488, we have 1486.50 (yesterday’s low was 1486.30), and major on the downside at 1484.50.
NASDAQ was called to open 75 higher at 3856 on the strength of the YHOO results. Interesting to note, yesterday’s low of 3762 was an exact 61.8% retracement of the recent 3652 to 3940 up move. We have strong resistance in a large band between 3870 and 3940.
If we can get through and settle above 3940, it targets a move to 4140 over the next couple of weeks. 4140 is a 61.8% retracement of move from 4860 to 2975.
For today, we have resistance between 3875 and 3897; if we get above this zone we should test 3940. Above 3940, 3956 to 3970 is crucial. Again, the settlement is key above 3940 or below it. Support can be found between 3833 and 3815, then 3786 to 3778, and 3753 to 3742. Any trading below 3725 is bearish.
The Dow continued its up move yesterday, and nearly reached the 10,863 target we had for the cash. Ultimate target now is still 11,140 in the cash. We’ll have resistance between 10,870 and 10,970.
Cyclicals have been the leader, up nearly 3% on the day yesterday. And in spite of the market bouncing around, the underlying numbers have been very strong in the market. The sub-indexes volume and advance/decline are all pointing to more upside.