Tuesday, March 1, 2011

Market Update (SP 500)

Well the short term picture is unclear, let's review what has happened so far. We had a correctional pull back into our support zone and a proceeding rally just above our noted resistance area to watch in the last post. Now what's next....

Even though today's sell off was done on less volume than Tuesday/Wednesday of last week the fact is the 1330 level was rejected as unfair and sellers stepped up in force and maintained control of the entire day session with little to any rotations to the upside.

I now have to be prepared for a potential drop into the 1270 - 1280 area. With Oil prices once again looking to regain control of $100/barrel , but I can not rule out the possibility of a double bottom at last weeks low pointed out in the above chart. I will use that low as my line in the sand for the short term bulls.

Now why 1270 - 1280?

The bottom chart is a weekly chart of the SP 500 futures, I see a measured move long taken from the 1224 high from November 2010 to current highs created 2 weeks ago. The midpoint support levels as noted on the chart come in approximately 1285 - 1270. As confluence I have added the volume profile to the right hand side. As you can see the high volume demand in the 1280 - 1270 area on the profile highlighted by the black horizontal lines. I expect to see buyers come back in to attempt to push prices back up to new highs.

Regardless, I still fully expect to see this market trade at least 1360 - 1380 in the coming month(s) and quite possibly higher. Which may be the end of this bull trend for awhile.