By John Pisanchik

Today was an unexciting day in the market. It opened with weakness, rallied early in the day, sat at the top of the intraday range, and in the last hour lost its ground. OK, so over the last couple of days, I have been talking about retesting the 850 level. That has happened today. In the first 60 minutes of trading, the S&P went to 847 in round numbers, then recovered. So one can say, aha, we completed the test, so let the rally continue!!! Well, not today. You see, a test should test the low and bounce back quickly, and hold the gains it made. This has not happened, so I am concerned about the quality of the test. In addition, if you look at the intraday activity, you can see weakness starting to come in on the 60, 30, 15, and 5 minute charts. When these are all consistently looking the same, it’s an indicator that the next move is about to happen on the daily charts. So in the daily activity of the S&P Cash, it looks weak, but the lower limits have not been violated. The intraday activity points to the market wanting to go lower soon. So what do we look for. Well, the 855 level is an important support level here, and it really should have bounced off of it, instead of sit on it. So if that does not hold, and there is not an immediate recovery the way we saw this morning (morning of 4/28/09), look for the market to start trading lower with support at the 847 level and next support at 840 level, followed by approx 836.Now, if the 855 support does hold, then the day will be a relatively uneventful day with the most probable range being 855 to 865. Happy trading.

Filed under: Market Opinions

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