Time for Resolution - Morning Market SnapShot for Thursday, August 19, 1999
In yesterday's commentary we noted that the September S&P futures contract was set to do a test of top of the high reached to date on the bounce from last week's low. This area also happens to be a 50% retracement of the ground lost in the recent decline from the all-time high.
The S&P gapped down at the open and could not overcome resistance all day. At this point, if we look at the 45-minute chart of the S&P, we find that it is locked into a trading range, going sideways pending resolution. In the larger picture, on the 135-minute chart, we can see that there is more resistance overhead in the 1360 area. What happens over the next day or two will be very important. If this area of resistance cannot be overcome, then a test of last week's low becomes a highest probability outcome.
To add to the suspense, both the September 30-year Treasury bond future and the Dow Jones Utilities Index (UTIL) formed an inside day yesterday, trading entirely within the range of the day before. This marks a consolidation and a period of hesitation. The UTIL has so far been unable to rally, confirming continued vulnerability in stocks. The T bond is testing the 20-day exponential moving average, where sellers will likely materialize on any weakness. Even though it appears that a double bottom has been put in, until 117^21 is broken to the upside on volume, bonds remain in a trading range, potentially changing trend from down to up, but are not out of the woods quite yet. Resistance immediately overhead is in the 115^20 area.
Charts specific to these comments have been posted to
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