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Futures have gone positive this morning as jobs numbers come in a bit better than expected. My internal trade timer turned green yesterday with markets pushing through and closing above their respective 8 EMAs. Even the Qs joined in on the action. As long as the indices continue to push higher, I will continue to add long positions. Here are the SPY and QQQ charts.
I rarely talk about the Nasdaq Composite Index and usually discuss the S&P but yesterday's action in the tech driven index drove the bounce in markets all around. While SPY does not seem to have corrected very deeply, the combination of the sideways chop action over several weeks coupled with the recent drop may have been enough.
During that time The Nasdaq corrected much more deeply and made up for the smaller correction it did in January. But what really caught my eye yesterday was how fast and sharply the Nas recoiled from the 200 day simple moving average. Meanwhile, SPY bounced off the support area it has tested for 3 days and closed back above the previous support area.
Markets are set to open higher this morning and the S&P will open above the 8 ema and the 50 sma. I will be looking for set-ups as my trade timer goes green. Here is the Nas chart with the 200 sma bounce, as well as the SPY chart.
Spooky kids....a blood moon on tax day. Will bulls take the lead today and negate negative feelings about taxes? Or are futures just a head-fake higher before they sell off?
Yesterday's doji that gapped up from Friday's inverted hammer looking candle would be a confirmed buy signal in SPY that is holding the support area. However, the index is still below the 8 ema and the 50 sma crossed up over it yesterday which would be a bearish sign. The bottom line is that we don't yet have a confirmed trend and I will not make decisions based on mixed signals. My timer is red until some strong accumulation comes into the markets. I have taken some losses this month putting me into small negative territory for April but still holding strong YTD and I intend to keep it that way by not pressing longs in a precarious environment. Here is the SPY chart.
Futures are moving higher on this lovely Passover morning, after SPY put in what appears to be an inverted hammer candle on Friday. After bouncing off my support level in the morning, the index sold off into the afternoon but support levels tend to be ranges and the close on Friday was still in that range.
What does this mean for the markets? Well it's a no-brainer, either Friday's candle was the end of the sell off or we will continue selling off. I know, I know, way to state the obvious. But with SPY below the 50 sma and the 8 ema by a good margin, a bounce higher this morning may or may not be the end of the sell-off. Currently my timer is red and it would take some pretty strong accumulation to turn it back to green. Gapping up by 5 tenths of a percent is certainly a good start and if the indices can hold those gaps and go higher, it might be enough to reverse my trade timer, but that will remain to be seen. Meanwhile, I will manage my few positions today while watching levels. Here is the SPY chart.
SPY did not head back to the top of the range but rather sold off and closed back below the 8 ema and the 50 sma. Moreover, it closed below the level of support that was the bottom of the range. The index decided it was time to get out of the range that it has been chopping in for weeks and down is the direction it chose. I get to have my correction...yipee. I much prefer a solid correction to choppy range bound action that doesn't have a clear trend. A deeper correction gets us a stronger trend back up after it bottoms.
Futures are lower this morning even as PPI numbers have come in strong. The market wants to go down, needs to correct, and this just what it will do. Next level of potential support is around 181.70 which has served as support and resistance over the past several months. Below that is the trend line that starts from the bottom in November 2012. That level is currently around 180. Below that is another level of support that was once resistance around 177.64 and below that is the 200 day sma which is currently at 176.12. Here is the chart.
Futures fluctuated a bit this morning but are currently flat after decent jobs reports. SPY closed with a strong candle yesterday above the 8 ema. I expect the index to continue back to the top of it's range. We shall see then if it turns back down to the bottom of the range or breaks through and holds this time. Meanwhile I managing my few positions, keeping it light while we continue to chop in this range. Here is the SPY chart.
SPY continues to move within its choppy range as it heads back to the top of the channel. At some point it will break out one side or the other. Longs can be traded but swings will not likely last more than a couple of days unless markets decide to fully breakout to that upside. Profits should be taken early as markets have been taking 4-5 days to get to the top of the range but only 2 days to come all the way back down. Here is the chart.
...And so we may not get one.
Although markets do look ripe for a move higher today after bouncing off the 50 day sma and bottom of the recent range yesterday. We have been zig zagging for several weeks within the range that I have been pointing out and there is no reason to think that those areas of support and resistance will not continue to provide support and resistance. Should the SPY drop lower today and lose those levels, I will watch for a move to the next support level around 182.
Otherwise I suspect that SPY will work to recapture the 8 ema with which it is currently crunching above the 50 sma, then continue back to recent highs. Eventually the door will open on one side or the other. The question remains whether it will be the basement door and a deeper correction or the attic door for a rally to higher prices. That said, markets do correct in one of two ways. Either they go down or they go sideways so perhaps this last zig within this sideways, range-bound correction was enough to allow the indices to get back on their trajectory higher. Here is the SPY chart.
Friday's sell-off, after making new highs in SPY, left the chart with a bearish engulfing candle that told us that the index would go back to the bottom of the recent range. The area between 183.75 and 185 is a strong cushion of support with the 50 day sma at 183.91.
If SPY loses this support, it can head back down to next levels of resistance turned support at 181.69 and 180.26 where it will likely run into the longer term trend line touched during the January correction. I would be happy for a correction to the trend line so that markets can set up again. The shorter term swings that chop up and down in the recent range makes swing trading equities a riskier venture. If the chop continues, I will start adding some "revert to mean" option trades and stay very light on the equity swing side.
Futures are higher this morning as investors seem to be showing a positive reaction to payroll numbers. SPY has become a bit extended from the 8 ema and some profit taking off new highs yesterday was not surprising. The index bounced off the lower level of the upper range basing out and consolidating the recent move.
But SPY was unable to hold it's breakout although the S&P held it just fine with a hammer candle on yesterday's chart. Remember that SPY trades while the S&P represents the only components within its index. I will be looking for positive trading today to hold near the highs above those levels before we eventually move higher. Thus far nothing tells me that the bullish trajectory has changed. I will continue to manage my portfolio positions individually as I see fit. Here are the SPY and the SPX charts.