On Wednesday morning, I wrote the following: ... Futures traders look for weekly S1's to get hit at some point: NQ 1769, ES 1410.75 and YM 12305. Thursday's low for NQ was 1770.25, Friday low for ES was 1418 and for YM it was 12315. Energy held up ES (SPX futures) a little more than I thought, but NQ (NDX futures) and YM (DOW futures) hit my targets.
What now? If the next move by oil is down, it could set up a monster NQ (chart) rally to channel resistance at 1840 and well into the February gap. That is the ultra rosy scenario and is dependent on bulls getting a close above 1802, 10 DMA, which has been resistance Thursday and Friday (blue line). The major obstacle, however, remains the 50 DMA, now at 1807.50. That is the moving average funds are looking at, whether COMP, DOW or SPX, but we get our heads up with futures. In fact, SPX is very close, so watch ES 1440.
The bearish scenario is an escalation with Iran, oil above 70 and a general freak-out with a visit to March lows. As traders, I want you to focus on NQ's weekly pivot at 1794.50. Forget all the noise and just let the action speak for itself. A move on volume above 1794.50 will set up an NQ break of 1802. A consistent inability of NQ to hold above 1794.50 sets up a re-test of 1775, now channel support and monthly pivot at 1776 as well as 38.2% 2007 (that is a solid confluence and can act as a magnet one more time next week). If that holds, it could be a strong buying opportunity going into earnings. If it breaks, look out below. It will be a rocky road, but until all the numbers come in, the markets could be in a range with big spikes both up and down. Having a cushion from extreme entries could be very profitable (it's always my favorite early week set-up), but for the most part stick to buying support and selling resistance. Any break of either, on volume, is to be respected. Stay disciplined, keep your emotions in check and you will be fine. Remember that this is a daytrader's market until a solid trend develops.
Note: for those new to this blog, click on the charts for a full size view.
What now? If the next move by oil is down, it could set up a monster NQ (chart) rally to channel resistance at 1840 and well into the February gap. That is the ultra rosy scenario and is dependent on bulls getting a close above 1802, 10 DMA, which has been resistance Thursday and Friday (blue line). The major obstacle, however, remains the 50 DMA, now at 1807.50. That is the moving average funds are looking at, whether COMP, DOW or SPX, but we get our heads up with futures. In fact, SPX is very close, so watch ES 1440.
The bearish scenario is an escalation with Iran, oil above 70 and a general freak-out with a visit to March lows. As traders, I want you to focus on NQ's weekly pivot at 1794.50. Forget all the noise and just let the action speak for itself. A move on volume above 1794.50 will set up an NQ break of 1802. A consistent inability of NQ to hold above 1794.50 sets up a re-test of 1775, now channel support and monthly pivot at 1776 as well as 38.2% 2007 (that is a solid confluence and can act as a magnet one more time next week). If that holds, it could be a strong buying opportunity going into earnings. If it breaks, look out below. It will be a rocky road, but until all the numbers come in, the markets could be in a range with big spikes both up and down. Having a cushion from extreme entries could be very profitable (it's always my favorite early week set-up), but for the most part stick to buying support and selling resistance. Any break of either, on volume, is to be respected. Stay disciplined, keep your emotions in check and you will be fine. Remember that this is a daytrader's market until a solid trend develops.
Note: for those new to this blog, click on the charts for a full size view.
This entry was posted
on Saturday, March 31, 2007 at 3/31/2007 12:42:00 PM.
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