After The Storm
We would not expect large volatile moves today; that was Friday. Do not come in thinking that it will happen today. We will probably stay within one standard deviation today, which for the S&Ps is 1750 points.
We would expect some follow-through buying in the opening, followed by a choppy, semi-directionless trade. However, if something were to happen, we think the odds favor it would be to the upside in terms of range extension.
S&Ps are trading up 500 points at 1473.50. On the upside, we have a cluster between 1474 and 1476, a key area at 1479, a major at 1481, a small at 1482.50, and another critical at 1485.50.
The NASDAQ was trading up 20 at 3794. A couple of key things to remember: the NDZ never made a new weekly low on Friday. 3615 was our low Friday, and 3600 was our low on Monday. Off the Monday low we rallied to a high for the week of 3874. The market will need to exceed this on a closing basis for the upside to look appealing.
For today, we have support between 3775 and 3762, then 3730-3712, below that 3650-3680, which is critical. If we were to close below this level, it would put a pretty big psychological scare into the market, which would most probably lead to further selling.
On the upside, we see 3800-3815. If they get above 3815, look for a trade to the zone between 3840 and 3855. If they get above that, 3875-3900 is the next critical level. Any settlement above 3875 should be construed as bullish. Keep in mind the NDZ is still down 9% for the month.
As we said Friday, we thought the Dow had the best possibilities for an up move among the indices. That indeed happened, as we settled up 82 points in the cash market. The next target is 11,000, which is about 150 points away in the cash. We would expect the market to have much difficulty closing above this level, and would be looking to initiate a short position up there.
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