Maybe the start of something good? I am watching 1071.50 $SPX

Good morning.

 

Yesterday was a trend up day.  Do you know how long it has been since we had one of those?  15 trading days.. three weeks during which we had 3 trend down days.  Yesterday it felt good to be on the long side and Tom in the trading room really strung the profitable trades together.

 

Before the bulls get too giddy, a warning, one day doth not a trend make.

 

Germany and Great Britain put out some strong production order numbers, beneficiaries of the weak Euro.  News of a stronger than expected Europe should get the Euro to rally and take some pressure here off the dollar.

At 8:30am this morning we will get another look at jobless claims. “That could put a damper on the day.”  If we were to get an upside surprise expect the market to follow through and the news cycle to begin to change.  We are where we were in March of 2009, looking for any type of green shoots.  This time the green shoots will not be credited to social economics but rather real organic growth and then we will really rally.   The market is good at picking them out and willing to rally through soft patches if it can see the harvest nine to twelve months out.

 

This being a Monday holiday week, both the Crude and Nat Gas numbers are out today.  I think Nat Gas at its 10:30 normal time and Crude at 11.  Drawdowns in both could help to strengthen a bull story.

 

Quote of the day:
Most people would rather be certain they’re miserable than risk being happy. – Robert Anthony

 

Chart

Score

 Day-1

Change

40 DPI

+2

-4

+6

52 WNH

+2

+2

0

10 DHL

+6

-6

+12

Total

+10

-8

+18

 

Major improvement in the breadth charts from Wednesday.  An 18 point swing now has all the charts on the bullish side with only the 10 DHL putting in a bullish score.  52 Week new highs are on a rocky start here and we are still making more new 52 week lows than highs.  A follow through today would strengthen the resolve and the charts.

$SPX chart:

 

Back to our SPX chart.  We are bouncing off the 1012 area hoping on the bull side that we don’t have to go back and test it again.  On the upside looms the 1071.50 area.  The band between 1071.50 and 1074.50 represents the start of heavy resistance to the upside.

 

To convince the bears that yesterday was not a fluke and that buying stocks is back in vogue, we would like the market not give up anything today, in fact we would like to see the market have a decent follow through day. A trend-up day followed by another solid green day is a very powerful bottom pattern.  The stronger the pattern the weaker the bears will become.

 

1071.50 will be decision time.  I expect to hit that in the next couple of days, even today is possible.  How the market reacts there will give us a picture of what we have under the hood here.  Is it a beefy V8 or a peppy slant 4?   If we slice through 1071 and 1074 we are more assured that we have the start of a rally to the upside.  If we fail at 1071.50 then 1049, let’s say 1050,  area must hold in order for this current thrust to continue on and get us up and above 1080 which is our 10 day goal to the upside.

 

I have drawn 1049 as pink since it is not quite the red stop zone yet.  That still remains at 1012.  But for today to validate yesterday’s trend day we best be able to hold 1050.  If it breaks we could slide all the way down to 1040 and raise doubts about the bull and increase the validity to the bear’s story.

 

 

image

 

Trade On.. Marlin aka RedLionTrader

 

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