Dow Futures – yesterday’s break down followed a failed test of top which we shorted at 10667 on Friday and again at the arrow marked here. I’m holding 1/2 that original short, having covered part of the position this morning on an intraday reversal.
Marked out overhead is where significant resistance comes in at two locations; if the market is really weak, price won’t even bounce to the first target.
S&P 500 Futures – ES 45M chart – this is officially a change of trend in this time frame (the 45M chart) from up to down. I’ve marked off the two likely spots for resistance. If this market is really weak, it will trade mostly below the 50% line on yesterday’s daily bar.
Bottom Line: Unless or until price can regain the upper most range marked out here on the S&P 500, the market is now in a new down trend. Confirmation of this will only occur once a set of lower swing highs and lower swing lows appear on the daily charts—clearly that point is many days away from here, and price is not likely to head there in a straight line, if at all.
What we can take away from this is that if the market can’t regain this trading range fairly quickly, then a deeper retracement is highly likely. We won’t be able to call a top (or not) to the market until a number of days from now.
So – a local change of trend is in place, but the primary trend on the daily, weekly and monthly charts remains up. We are cautious on the long side, but also open to new long ideas.
If price can firm up and act strongly here, tomorrow we’ll be more encouraged to hunt down new long opportunities; longer term traders and investors should use any bounce to tighten up stops further under profitable positions, just in case.
04.12.08 12:56 #