Here’s Where We Could See Some Downside

  • April 11, 2005
  • Chris Curran


Despite closing on a down note Friday, the
major indexes were still able to finish slightly higher for the week.  A
positive bias was seen for the first 4 sessions of the week, although this
likely stemmed more from a lack of sellers than anything else, as seen by the
light volume, and gave the bottom pickers a reason to pop off.  However, the
combination of bad news in the Trucking sector and a flurry of Software warnings
weighed on equities and overshadowed the week’s gains.

The June
SP 500 futures closed out the week with another small gain of +5.75 points,
while the Dow futures closed with an even smaller relative gain of +42 points. 
Looking at the weekly charts, the ES reversed off of last week’s doji, but was
contained by its 10-week MA.  On a daily basis, the contract posted a market
structure high off of its 50-day MA resistance and settled back on its 10-day
MA. The YM squeaked out a weekly market structure low and posted an inverted
hammer off of its 40-week MA.  The daily chart is showing a market structure
high off of the contract’s 20-day MA and settlement back below its 10-day MA. 
For you daily 3-Line Break followers, the ES and YM still are hanging on long
with Break Prices of 1170 and 10431.


               

Looking
ahead, after a very quiet week of trading last week, market action should pick
up.  This week will be the busiest of this earnings season, with a number of
critical economic reports on the calendar.  We have seen a fair share of
downside warnings in the last 2 weeks, which suggests to me that the economy and
corporate profit growth could be slowing.  This should be no surprise, given the
Fed’s 7 rate hikes and soaring commodity prices.  Nonetheless, I get the
impression that most market players are not expecting a slowdown in earnings
growth.  And consequently, if companies do not deliver solid guidance that is up
to par with expectations, we’re likely to see some significant downside from
current levels.

                

 

Please feel free to email me with any questions
you might have, and have a great trading week!

Chris
Curran

 

 

 

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