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Same set up with QQQQ, of course, but even more precise. The high was 48.06, 50% is 48.06. Add the 50 dma at 48, and bulls better step up or they will have a nasty month of May. I don't know where they will find the fuel to save this one with equity put/call already at lofty levels of exuberance.

Close:

NQ (NDX e-mini futures) hits 1960.50 (continuous contract), just 2 points shy of what I consider formidable resistance and drops hard. Failure at 50% on dwindling upside volume is a big classic.
This is a bear market until proven otherwise and overbought combined with optimistic sentiment needs to be shorted. If they do bring it a little higher, it would only be a temporary reprieve. I love bear market rallies as they can be very profitabe, but they are only a distraction in the overall trend. Keep it simple, or you might just miss the upcoming large drop. This rally is most likely over, or very close to it.

Morning update:

NQ is quietly making its way up to weekly R1 (1956) and that 1960 area. ISE equity is at a staggering 215, a level not seen since the March high.

Pre-open:

NQ is right at 61.8% projection March (1945). Resistance above would be 1962.50, 50% of the entire bear market drop followed by 1969, 200 dma continous contract (just to clarify earlier post). Support will be ex-triangle resistance at 1934 followed by 1930, 1924.75 and 1914. Watch bonds.

PM update:

NQ is forming a triangle on the daily which could set up an upside break to 1962.50/1969.50. If that happens, I strongly suggest going flat if you are long and shorting if so inclined. The upside is not what I want to chase here. I suspect a lot of traders are gunning for QQQQ 48.15, 200 dma. We might get there, we might not. Volatility is low enough to be early on this one anyway. There is a remote possibility bulls go nuts and try and close that 50.62 gap, but that seems a little far-fetched without a pullback.

Morning update:

Still in the range, but ISE equity has jumped up to 205, an extreme level of retail trader optimism (speculative equity long calls). This does not normally bode well for the markets, although intraday readings are not 100% reliable. Still, it's a major red flag, dumb money is expecting the break to be to the upside.
I will update after the close.

Open:

The VIX is coiling on the hourly. Weekly pivot is current resistance at 20.14, support is 19.68. A break above 20.40 will mean the bears are once again attacking. The range is extremely tight, so the upcoming move will be huge (one day).
Consumer confidence at 10.

Pre-open:

Nothing much has changed since yesterday as we are on hold pre-FOMC. COMP 2425 is still a problem and bonds are starting to recover a little. This is what traders need to look at going forward. TNX (ten year yield) is at 5 dma support (3.8%), which is also the June 2005 low. Any break below means that equities have found their competition at these levels.

This monthly chart with a fib retrace off October high/January low shows how important the 2425 level is for the COMP. As previously discussed, it's 38.2% (the inverted golden fib) but also right at the ex-bull market trendline, lost in January on a closing basis. That we did not close the week above could be a significant turn of events. Overhead resistance would be the 20 month ma and 50% at 2500, but bulls could have a battle on their hands right here. There is the dreaded end of quarter window dressing and maybe it will be supportive. But an initial drop on Monday could very well be in the cards if COMP 2425 is not decisively conquered.
One warning for bears: everyone is staring at the same chart, including SPX 1405 ex-bull market trendline resistance. Equity ISE is back down in the low 100's, so retail put speculators are back. That does not mean we won't fall apart, just that any pullback could be short lived ahead of the Feds.
Random thought: QQQQ 45.27 gap is not yet closed but neither is the one above at 50.62. How's that for analytical turbulence...Maybe that's why I am paying attention to COMP 2425: it's where we are now and it means something in the charts.

Morning update:

April 25 (Bloomberg) -- U.S. consumer confidence fell more than forecast in April to its lowest level in 26 years, a sign record gasoline prices and rising unemployment will prompt Americans to curb spending.

VIX is still below 20, even though futures drop hard. But bonds now have a bid. Watch ES 1387 support.

Open:

We drop down to pivots after an ES tag of 1398. Awaiting consumer sentiment at 10.

Pre-open:

The bid is still holding, although bonds have gained a little. Watch NQ 1959.50, monthly R2 which will correspond to QQQQ 48 if we get past yesterday's high.
Another possibility will be a COMP run to 2500 by next week if it can close again above 2425. MSFT is not in the party though.
Gold needs to hold 875 at all costs or it will test 850.

Overnight session:

Futures are moving higher. ES is tackling 1395 again and if that breaks out, look out above. The 200 ema is at 1411, followed by 1420, 50% Oct/Mar. The dollar is rising sharply versus the Euro (one of my long term trades) and oil is falling. This market is very resilient. QQQQ/NDX look headed for their 200 dma's as well if NQ gets past 1950/1960. That's a big if, of course. NQ 1925 is a pivotal level overnight. It just shows equity shorts that fighting a bond sell-off is a dangerous game, but we are approaching the February high of 3.96% on the ten year. Above that, we have the 10 month ma at 4.08%. I expect some bond buyers to re-emerge in that zone.

NQ breaks out and hits a hair below 1950 (1949.50) in what is heavy resistance, above 61.8% March projection, weekly R1 and 10 points below monthly R2. It puts QQQQ just shy of the 200 dma (48.19), so we are at a major crossroad.

Pre-open:

AAPL is holding on, putting NQ back above the seesaw 1893 level. If bulls manage a breakout, we could see 1950 by tomorrow if MSFT delivers after the close. Otherwise, a trip to 1866 is likely. So far, we double bottomed from yesterday's low, so watch 1888 to see if it holds. Bonds are still selling. It looks like they want to bring those yields close to 4% on the ten year.
I am in the process of moving, I will update after the close.

NQ 1893/1896 support held this morning and is once again being tested after the close with the AAPL earnings. Bonds have remained weak, given support to equities even in the face of 118 oil. Money wants to go to stocks, but as long as ES stays stuck below 1395, bulls will have a tough time of it. We are in a coiling range, with uncertain resolution. Don't fight the breakout/breakdown. when it happens but I still think NQ needs to close that gap at 1866, especially with the VIX at relative lows.

Close:

The drop brought NQ down to 1872.75, a little shy of the 1866 Friday gap close and weekly pivot. The loss of 1893 intraday got the bears rolling, but after the close we are back above that key level. The gap is still open, we will see how bulls pull out of it. It will be important for bulls to negate what could be a head and shoulder on the hourly chart (posted).
Oil is an issue, slamming the TRAN (Transports) down 80 points. The rejection at 5000 is critical and many chartists are paying attention.
The VIX is still trading below its 10 day moving average, current resistance and support for equity bulls (now at 21.73).
Nasdaq new year lows 143 to 30 new year highs. I mentioned COMP 2425 Friday morning, it is a problem.
For now, watch the 5 dma. still holding with the majors. The trend is still in the bull camp, but expect more chop ahead of MSFT on Thursday. Watch NQ 1893/1896.75.
BRCM is a big winner after hours, as you know that has been one of my favorite stock to pick up in this correction.

Pre-open:

The selling is relatively under control as bonds keep dropping. NQ is holding 1900 in the overnight session. Watch those AD lines. Bears only really take over below NQ 1893. I will update after the close.

Close:

ES 1395 did the trick (see Sunday's post). The high was 1394 and that was pretty much it. TXN gives techs a cold shower after the close. Equity ISE was starting to get up there and I know that many of that follow my advice over the years have learned to trade with it. Watch NQ 1893.75, today's low and previous April double top, now important support.
I will be out of the office tomorrow.

PM update:

VIX alert. Oct/Dec lows in sight (18.30).

Morning update:

Watch COMP 2425.

Another big tech winner as GOOG delivers after-hours. Watch 541, February high. Support is now 467 and 486.

Pre-open (2):

OIl (CL/QM) right at the top of the ascending wedge (chart). Bulls want to see a break above 115, which would set up 116.80. Failure should send us down to 113, current support. See also Tuesday's comment: link.

Pre-open:

Futures drop on some negative earnings, although IBM really delivered last night. Volume is light enough for pinning efforts to take place and that is what we are seeing. Watch yesterday's bond breakdown levels(ZN 117).

The VIX hit the lower bands and is due for a bounce (chart). SPX option expire today, unlike the rest, always making opex Thursdays interesting.

Close:

Just so that no one gets jealous, NQ/NDX/QQQQ go up and close last Friday's gap down (NQ 1858). ES does the same (1363). More earnings good news after the close and option call sellers are scrambling to cover.

My pre-open chart on the ten year yield was a clear heads up to pay attention to those yields. With a close at 3.7%, bonds have lost recent support (see ZN chart) and rotation out of them and into stocks was the flavor of the day.

A lot of this is re-pricing equities with the lower dollar. But oil prices are a real problem and I think it is time for Bernanke to stop talking up rate cuts. We are low enough, now we need to support the dollar and calm gas prices.

Another factor, hardly mentioned in the press, is companies beating lowered earnings estimates. We discussed this back in January as every CEO used the sell-off to lower guidance. Now they look like heroes, but don't get fooled. This is still a trader's environment within the context of a bear market. This market can go higher, just stick to stocks with an international presence as long as the dollar stays this low.
Overall potential target still remains the 200 dma for SPX, or thereabouts (1425/1450).

If you don't like elevators, you're not alone: link.

It looks like INTC delivered, big bounce off the 50 dma at 20.85. Up 6% after hours. If they can sustain this, NQ should shoot up to when it re-opens. That is welcome news for bulls and a perfect set up off the April 1 gap close :).

It's interesting to note that everyone was commenting on how gloomy earnings were, but they all forgot the RIMM release and now INTC. Techs so far are shining. No subprime woes there, the consumer can't live without cell phones and laptops. One exception is Seagate, so watch out for some back and forth there.

A musical genius, Peter Gabriel, takes on web search: link.

PM update:

Bulls do their move at key support, classic Tuesday mid-morning op-ex reversal. The one problem on the horizon is oil, now at 113 (which is why NQ is lagging ES). Weekly trendline resistance is higher, around 114.90, which is also 23.6% projection March. Pretty stiff resistance since it is also the top of an ascending wedge. If for some reason oil bulls crack it, next R is 116.80, followed by 118.40. That seems very far-fetched, but watch 111.80/112.20 on any pullback. Keep in mind that oil has become a hedge against stock market collapses, which adds enormous speculative pressures. For now, trade the range between 112 and 114.
Hopefully, inventories will rise tomorrow and we could get some relief.

PM update:

NQ/QQQQ/NDX close the April 1st gaps. The area is also 50% 2008 and 50 dma. Per Friday's post, it was a magnet that bulls now need to hold , or we will hit weekly S1's and attack those other gaps.
For now, awaiting INTC earnings after the close. The gap down from the last release in January is still the overall trading range (19.88/22.69).

Dear readers, I have been out of town for a few days and will not be back for a little longer. Postings will be sporadic. In the meantime, stay safe.

Closing hour:

A few 20 dma dip buyers, but it is a sucker play. I would be very patient if shooting for a long. Wait for those gaps. If it doesn't come today, it will come Sunday night or Monday. I have been worried all along that they were not closed, now is a chance for the markets to get them out of the way.

NQ 50 dma is at 1787.75, 50% Mar/Apr is at 1781.25. Gap close is 1784.75. Plenty of magnets.

QQQQ April 1 gap close is 43.72. How is that for an April fools.

The GE drop is huge. That monthly chart is freaky. March lows at 31.65 will need to hold or the stock is going sub 30 for the first time in years.

PM update:

New lows, ES loses 1343. Watch that NQ April gap (1784.75/1813.25).

Morning update (2):

ES bounces off its 50 dma. There was also a VIX divergence, lower high. Watch the gap open for ES at 1346.75.

Morning update:

April UMich consumer sentiment 63.2 vs. 69.5 in March

NQ loses 1835. AD lines are not improving and bonds hold the bid. We should test Wednesday's lows. Note that CBOE equity put to call is at .90.
ES 50 dma is 1343.

Open:

AD lines are -2000 right out of the gate. We await consumer sentiment at 10. NQ currently struggling with 50% March at 1835. Bulls want to move above 1842.75. Today's gaps are ES 1362.75 and NQ 1858.75.
Watch that ten year yield, must hold is 3.449. If we break that, we will probably head to 3.432.

Pre-open:

Obviously, I spoke too soon. Wednesday's lows are now in jeopardy as NQ tags 1835. We might very well go down and close those gaps after all (which would be much healthier in the long run). Watch NQ 1821.75, critical support.

April 11 (Bloomberg) -- General Electric Co. reported its first decline in quarterly profit since 2003, missing analyst estimates with a 12 percent drop in earnings as a freeze-up in credit markets blocked asset sales and forced it to write down the value of investments.

Barring some major disruption, it does look like we put in a low prior to expiration week. We have consumer sentiment at 10 tomorrow, but the markets seem bent on proceeding higher and that needs to be respected. As you now, I have set SPX 1425/1450 as an upside target, but frankly the real target is excess optimism which we have not yet seen. It is showing up in ISE at times, but CBOE equity is still pessimistic. I continue to be troubled by the fact that this pullback did not close the April 1st gaps, but as long as Wednesday's lows hold, it is not quite yet in the cards. It will be at some point, of that I am certain. For now, go with the flow but watch your back.

Oil is going to have to fall off its perch, regardless of what tune those heavily invested in commodities keep whistling. I know of no one in the middle class that is not feeling the pinch. The lower middle class is beyond being pinched, they are in a struggle for survival. I just want to put that word in out of respect for what our countrymen are going through even though we see green lights in the markets. There is nothing that pisses off a struggling taxpayer more than to see elation in the markets when everything around him is bleak. So let's get all those shorts out of the way, but I hope the only ones that get suckered in at the top are traders and investors who got too greedy, not your average Joe. Unfortunately, that is not how the game works. Meanwhile, I will do my best to steer you away from trouble. Hold on to your capital no matter what and don't worry if you miss out on a trade, there will be many others if you still have cash. We are mostly dealing with futures and that usually keeps you flat overnight. Not a bad thing.

Morning update (2):

SMH could be ready to break out of the channel. If it does, next stop could very well be 32.20, confluence 38.2% 2007/2008 and 200 dma. Watch 30.80. Failure there negates the trade. However, if someone is going to make a run for the 200 dma, it is going to be SMH.

Good points to remember if you are feeling too bullish: link. Trading and investing are two different games.

Morning update:

Thanks to the semi group, bulls catch a bid, after an early struggle at March highs for NQ (1839.50). Currently, resistance is at 5 dma and 50% for the week, 1857, but we could tag 1862/1865 on a flush to the upside. Support has moved up to 1843, overnight highs. Watch ES 1361.50, still a weak point.

The very negative readings on equity put to call keep supporting the markets. The short side is just too crowded. I am still a little worried that we have not gone down to close those April gaps, but yesterday's bid at 61.8% April for NQ might be the low for now. Obviously, we lose that and we do close the gaps (see yesterday's postings).

The VIX is stuck in a very tight range, unable to break out above its 10 dma. Something will have to give. The 22.83 level is pivotal and has been for three days.

Unemployment pre-open and Bernanke at 10.

Close:

We did bounce off that 61.8% level for NQ (see previous post), but are currently stuck under 10 dma resistance. Tomorrow's session will have confluence weekly and daily pivots at 1842/1843. ES has crystal clear resistance at March highs, 1361.50 (1839.50 for NQ).

Semis bucked the trend today, but SMH 30 is still a problem.

Negative sentiment per equity put to call ratios persists and that is ultimately supportive. However, we have some pretty serious gaps below, ES 1321.75/1338.75 and NQ 1784.75/1813.25. Watch out for those if we fall apart. Again, remember that tomorrow is the Thursday before option expiration week, when lows are often put in.

I know I mention NQ a lot (NDX futures), but that is the one to watch when things get heavy.

Noon update:

Support falls, watch 61.8% April for NQ at 1821.75. Below that, we will start attacking the April 1st gap. Note that the ten year yield has trendline support around 3.45%.

Morning update:

Big spike in oil after he inventories. ES is retesting 1361.50, must hold. NQ 10 dma is also at stake (1837.75).

Pre-open:

Volatility is back. Important support is still those March highs, 1361.50 for RES and 1839.50 for NQ (ER is 706.20). Remember that we often put in the lows before option expiration week (this week). Resistance is the 1865 area for NQ.
Some good news for Citi, but bad news from UPS. Thus, look for financials to be the stronger sector his morning as long as XLF holds 26.

Close:

In the end, it was all pretty straightforward. NQ drops to 1843.50, just shy of its weekly pivot and ES manages to hold its March highs (1361.25). The VIX was warning bears to close out shorts at lows, but bulls are not off the hook quite yet.
CBOE equity p/c ratio ended at .91, still very pessimistic.

PM update (2);

Volume suddenly appeared at the 2 PM turn and it was very bearish. NQ lost the lows and looks headed for the weekly pivot at 1842.50. The VIX did not make new highs on that dip, so for now, book profits if short on these moves, don't hold on forever. This tape is dangerous. But bears now have the ball. Those March highs need to hold (see pre-open).

Fed minutes: link.

PM update:

Bonds are not really bidding that much and bears can't get equities to completely fall apart. NQ holds 38.2% April (1849.25). Very choppy day to trade, but it looks like bulls are holding the fort somewhat. However, as long as 5 day moving averages remain resistance, we should see more downside by tomorrow.

WASHINGTON (MarketWatch) -- A package of tax breaks and funds for foreclosure counseling is heading for a Senate vote as early as Tuesday, while House of Representatives lawmakers are preparing separate proposals to aid strapped homeowners.
The Senate's bill won broad approval last week and includes $100 million in funds for housing counseling, $4 billion for local communities to buy and redevelop foreclosed homes and a provision that allows losses incurred by businesses to be applied retroactively for four years. It also contains a $7,000 tax credit for those who buy foreclosed homes.

Pre-open:

No bright spots on the horizon, except bonds. March highs will need to hold, ES 1361.50 and NQ 1839.50. Note that the NQ 10 dma is right at that spot. Check the AD lines when we open to see if price is being confirmed. VIX resistance will be 23.66, 24.15, 25.04 and 25.56.

Initial downside target should be NQ 1842.50, confluence weekly P and April lows.

HONG KONG (MarketWatch) -- China banking and securities regulators signed an agreement with their U.S. counterparts Monday that will help to lay the groundwork to enable Chinese investors to buy and sell U.S. stocks and mutual funds.

This should boost volatility...

AMD and AA getting hit after-hours (especially AA). NQ 5 dma is what bulls need back (1866), or we will get some pretty heavy selling tomorrow.
BPNDX (bullish percentage for NDX) is right at December resistance (chart).

Closing hour:

The trend is finally flipping as NQ drops its gap close of 1869.75. Not coincidentally, the high was linked to the ten year at 3.6% again.
Bulls need ES to close above 1375/1376 (neckline inverted H&S).

PM update:

ZN 117 was support and bonds catch a light bid. NQ fails at 1893.50, 38.% off October high/ March low (see Friday's post). Resistance once we break will be 1888.50. Bulls get it all back above 1891.25.

Morning update:

Stop run to overnight highs, which for NQ is also daily R1. Oil has jumped up to 108 and that is curbing the enthusiasm. Watch the hourly charts for any sign of trend change. ISE equity has moved up to 179. The retail crowd is starting to dive into this rally.
Looking at NQ continuous contract, we also have 200 ema at 1911. Add weekly R1 at 1918, and that could be what they are shooting for on an extreme run up. For now, chop at support (20 ema 60mn). NDX 200 ema is at 1901.

Pre-open:

Bonds keep dropping. That ten year yield at 20 dma was support and that is giving equities another boost. An area of support for ZN (ten year bond futures) is the 50 dma just under 117. That could be a stall for equities. Watch NQ 1893.50 on the upside. If bulls really charge, weekly R1 is at 1918, which would put QQQQ near 47. I would be surprised though if we do not at least go down and close this morning's gap (1869.75).

NDX is leaving behind quite a few unfilled gaps. The immediate one is right at 50 dma support (1779/1780), and will most likely get filled in the near future (QQQQ 43.72). The overall target for SPX is still between 1425 and 1450, but as mentioned on Friday, we are getting a little overbought. The coming week is pre-option expiration week, very often a time when a low is put in before charging higher, if higher is the overall game plan.
Watch the 34.80 level for TNX (ten year yield). NQ will try for a retest of Friday's high, maybe even a slightly higher high. Look for divergences if that happens.

Close:

In addition to hitting those major fibs, NQ also tagged 100% projection March (chart). No wonder we backed off a little. I'm also noticing more optimism building in the media as well as equity put to call ratios, so the short fuel is going to start drying up. One remaining positive for bulls is the ten year yield dropping to 20 dma support, thanks to today's bond bid. But we are stretched short term.

Closing hour:

Logic returns as we finally lose that bid. NQ never even touched the highs again which, as mentioned earlier, were at major confluence resistance. We are due for some weakness next week. It was very strange to see that low volume push as bonds bid. It definitely paid off to wait for the true colors to show after the 2 PM turn.

PM update:

Amazing short squeeze, but NQ hits 1891.25, just 2 points shy of a major confluence of 38.2% Oct/Mar and 50% 2008 (1893 area). I'm not sure we will get much higher today, although the ES overnight highs of 1388 were not tested. Watch NQ 1879.75 on any pullback. It's just very hard to get bullish when bonds are bidding. Very weird tape.

Noon update:

Short squeeze as we sail past ES 1372.50. Retails and Transports are now up, but semis and financials still down. This market is punishing the obvious trade. AD lines are now positive. The big winner today is GOOG, the rest is just mild profit taking. Hourly charts are still in an uptrend. The close might be a very different story, so again, mind your step today and take your cue from bonds.
ISE equity just jumped up to 207, now at an extreme positive. This little bounce could have been a bull trap.

Morning update:

The market is not completely tanking as it cycles through everyone that went short at the open. However, selling pressures are building and I would not chase the long side today. If NQ loses 1857.75 a second time, we should hit 1848. ES can't stay long above 1372, watch 1367. I have to warn that shorting this market is difficult due to the extreme negativity still built in. Stick to scalps, you might be better off. Not a very good day to trade, waiting for the closing two hours might be a wise idea. The flow will get more defined.

Pre-open:

Bad news on jobs, but futures hold on, at least for now. ES 1372.50 again. Bonds have started a nice bid, I would be careful.

PM update: