No-Change Situation
We expect a “no-change situation” in S&Ps today, following two of the quietest days that we’ve seen in a long time.
This morning S&Ps were trading up 90 cents at 1495.70, with a range of 1498.50 to 1493.50. Yesterday we had a 1,000-point range.
For today, our morning pivot will be 1495 to 1496.50. We have resistance between 1500 and 1503.50. Above 1496.50, this resistance should be challenged. If we were to get above 1503.50 — especially on an hourly close — we think 1510 can be challenged.
Note: we have major resistance between 1510 and 1520 — 1000 points of resistance. We feel that this would be an ideal area to begin inititating position shorts. What does this mean? We would be sellers of a half-position in this area.
Below 1496.50, we see support between 1495 and 1496.50. Below this, 1493.50 should be small support, then yesterday’s low of 1491. We have support between 1489 and 1491.
Below 1489, look for a test of 1485 to 1483. If the selling accelerates from there, 1475.30 is a 33% retracement of the move from 1424 to 1501 and would be a target.
NASDAQ futures were up 1400 at 3764. The market continues to attempt to regain much of its lost ground. It has done so due to the semi-conductor index, which is up more than 11% on the week. We have resistance between 3770 and 3790. Above that comes critical areas over 3800. The 50- and 100-day moving averages are 3800 and 3810, plus last week’s high.
If we can get above 3810, we are still looking at 3843, which is a 61.8% retracement. Any close above 3843 is bullish, targeting a move to 4000.
However, it is worth noting that on the heels of an 11% rally in the semi-conductor index, this market has still not seen the broadening advance needed to get the upside in gear.
On the downside today, we have support between 3740 and 3729. Under that, we have 3710 and 3690. If we break 3690 on an hourly close, traders should look to get aggressive on the short side, and it targets a move eventually to 3400.
Along the way down, 3655-3650 is support, and then 3620 to 3605. Obviously, the target of 3400 would not be for today.
Dow finally gave some of it up yesterday after a string of impressive rallies. We still anticipate sideways pullback action until the market can find support — most likely between 10,950 and 10,850 in the cash.
In the meantime, bulls can take some solace in the close above 11,000. All in all, we are looking for just more “coming in.” If you remember yesterday, the Dow was 4.8% above its 50-day moving average, even after yesterday’s decline, it’s still 3.7% above that average.