Fari Hamzei
"And, Nostradamus, shall lead them...."
With SPX and NDX closing at two sigma, and McClellan Oscillator readings of 168 and 94, we are a bit stretched. But there is huge bid to the market and I doubted this bid will wane till we go thru AAPL Earnings Report on Tuesday AH.
DJIA, having gone thru our 12,700 multi-month channel breakout target, is now poised to hunt down the current levels of +3 sigma (12,987) and 200 Day MA (13,093) confluence.
By the way, next Wednesday morning, Alexis Glick, the very cute & very smart anchor (a five sigma event by itself) for FOX Business Network has invited me to her "The Opening Bell" segment @ their NYC HQ, so there will be no mid-week commentary from me. Alexis, a former head of NYSE Floor Operations for Morgan Stanley & Co and a Columbia grad, is as smart as they come. We just linked
her blog to to this blog.
Brad Sullivan
These charts were posted on Thursday March 6, 2008 at 1215 CST in our SuperPlatinum Virtual Trading Room.
Brad Sullivan
The index markets reversed overnight worries from a Chinese decline and pushed significantly higher. In fact, the SPX joined the All-Time High Club as the index finally pushed through the 1527ish previous high close registered in March of 2000. Now the index has the intraday highs of 1552 and change in its sights. Without question yesterday’s sharp move caught many traders flat-footed. Given the China news, and the fact that this time there was a catalyst for the decline (raising the stamp tax on stock transactions from 0.1 to 0.3%) it should have come as no surprise that the indices were not going back down the Feb. 27th path. However, to predict new highs across much of the board was not something many were thinking when the SPM was trading around 1516.
And there lies the proverbial rub of the index trade in our current climate. By most measures we are overvalued/stretched and should be looking for a moderate decline. However, the indices keep on chugging higher and for those fighting the tape it has been a painful experience both psychologically and financially. As I pointed out last week in a couple of comments, the indices were stretched on a variety of readings…normally this plays out 1 of 2 ways: either a sharp decline or a moderate decline followed by sideways action. Neither of these scenarios is playing out. The decline was shallow, but only a couple of sessions of range oriented action followed. This leaves me with a scenario that rarely comes into play and that is the blow-off rally. Simply put, the DJIA and SPX have POTENTIAL to stretch this rally significantly higher throughout the summer. There are now 3 options on the board and it should make for some very interesting trading over the next 6 to 8 weeks.
For today’s session here are the levels in SPM I am focusing on: The first area of resistance should be found between 1535.50 and 1537.50…above this look for a push towards 1541. I would be looking for the zone between 1540.50 and 1542.50 to establish a moderate short line. Above 1545 on a 30 minute close, the white flag is waived on this transaction.
On the downside, support should be found in our old resistance zone of the low 1530’s…essentially look for support between 1533.50 to 1531. If this zone fails to hold, look for selling to accelerate towards 1528. Support is found within the 1529 to 1527 zone and again from 1525 to 1524. Clearly any move towards this area would leave many scratching heads.
All told, with the month end and tomorrow’s employment report, I would asses the odds of a significant move higher or lower as remote. Keep it close to the vest, but be ready to play if something changes during the session.
Brad Sullivan
Thursday May 24, 2007
The SPX index failed to close above the All-Time High close yesterday, and for the third consecutive session this index could not generate any “follow” buying. Accordingly, late selling has hit the market each session, pushing the index below its ATH close from March of 2000. The question on everybody’s mind is pretty simple…are we beginning to move into a resistance area that will hold prices down for the next few weeks?
On any technical measurement, the indices are clearly overbought – IN THE SHORT TERM. Consider the performance of the major indices from their respective March trading lows (seems so long ago doesn’t it?) to their recent highs. The DJIA is up about +12.8%, the Midcap 400 is up 11.5%, the SPX is up 11.2%, the NDX is up 9.9% and the Russell 2000 is higher by +8.8%. All of this taking place in about 9 trading weeks. That is a tremendous rally in both net change and velocity (measured in time). The odds are favoring a pause/contraction/slowing of this move. However, let’s keep in mind that ODDS only tell part of the story and if this is a stealth/blow off move to the upside there is plenty of room left in higher price zones.
As for today’s trade, the housing reading at 9:00cst should add some intraday volatility and the Durable Goods reading was able to push the SPM from -2.50 at 1523 to the current +0.50 at 1526. In addition, all eyes remain squarely focused on the holiday coming up this weekend as well as any happenings in China, where it appears that Mr.Greenspan does not have the same pull as he did several years ago. His overtly bearish comments on the Chinese market produced a settlement of -0.5% in their session…not exactly the earth shaking response one would anticipate.
Here are my levels for the SPM today…We are called to open within my key support zone from 1524 to 1526, I anticipate this zone to be the transitional area for a red light/green light type of session. Above it, is green light (buying) and below it is red light (selling). Above this zone we should hit resistance between the 1528.50 and 1530 area, followed by 1532.50 to 1534. The levels above 1528.50 have been probed for 3 consecutive sessions with yesterday’s action creating a new contract high…however, the failure to close any of these 3 sessions in positive territory has to be considered a NEGATIVE. Whether or not strong selling appears at LOWER pricing zones remains to be found, however, what should be important from a trading perspective is the ability to sell this market in the lower 1530’s for a move lower by the close of trading. In other words, we are not finding a boat of sellers at 1520 (assuming we get there) but we are finding them at 1533. It is the opposite of momentum, one in which a trader can sell higher highs and profit. Keep this thought in mind the next two sessions.
On the downside…below the opening support zone, 1522 to 1520 is CRITICAL support. If we move below this zone on a 30 minute closing basis it should create a trade towards the bottom end of the old resistance zone 1518.50-1515. That zone is now neutral/transition…below this is key support between 1512.50 and 1510. Barring an outlier news event, I see no reason to chase ‘em down below this level.
I have included a chart on the DJIA and its 200 day MA “extension.” We are holding at the highest levels since the start of 2006, but more importantly, the highest levels since the 1980’s. Is this a sell signal? Possibly, but remember this…in 1999 the NDX went to +51% above its 200 day MA.
