Choppy Waters
Our morning market forecast: choppiness ahead, at least for the first 45 minutes. This morning, S&P futures were down 200 at 1472. On Thursday, S&Ps closed about 600 points above fair value.
For this market to get going, we need to get above 1477. Remember, 1478.50 is a 50% retracement of the move from 1533 to 1424.
On the upside, we see 1473, 1475, 1478, 1480, 1481.50, 1483.50, a key area at 1485, and a major area at 1487.50-1488. On the downside, we see 1470.50, 1468.50, a major objective at 1465.50, a key area at 1463.50, a small at 1460, and then another major at 1458. The 1457.80 level is a 61.8% retracement of the up move from 1433 to 1498. Our Morning Pivot is from 1473 to 1474.50.
NASDAQ is trading down about 15 at 3616. As we outlined yesterday, the market has failed to embrace good news, which has bearish connotations. Because of this, expect the market to go through a period of downward probing until a base can be formed.
Until we get some type of capitulation on the sell side and some spike in volatility, we will not have seen the bottom.
Today, we see support between 3605 and 3595, a critical area for the market. Below 3595, we expect to see sell stops, and would look for a trade down to 3560. Under that, we see support between 3544 and 3538. If this fails, 3513 to 3508, and below that 3480, is the last line of defense.
On the upside, we see 3635 to 3645, which will be critical. More resistance is between 3665 and 3685; in other words, we have much to overcome. Above that, we hit our old important support between 3690 and 3710.
Any settlement above 3710 could be construed as a bullish reversal, and lead a move next week back toward 4100. We feel there is strong resistance from 3635 to 3710.
After settling moderately higher yesterday, Dow Futures continue to remain above key moving averages. In addition, it has benefited from the strength in the financial sector. If this continues, we are looking for a retest of the recent high, which was 11,062. Our recent high settlement was 11,029 on Tuesday.
Our target is still 11,100. We do not see much upside above this level. Support is found at 10,905 to 10,885, then very strong support builds between 10,810 and 10,760.