Market Snap Shot - Technical Update
For the third day in a row, the June S&P futures have been trapped between resistance overhead at the 20 day exponential moving average and support at the 50 day moving average. Today's trading range was the narrowest in four days and was also inside that of the day before, producing an inside day. All added up, we are expecting the market to become dynamic shortly and are ready for breakout mode.
Over the past four sessions, the June S&P futures has traded down through it's 20 day exponential moving average where support normally lies in a strong uptrend. It has now tested the 50 day moving average in addition to the uptrend line twice in the past three days, an area where small sell offs find buyers to buy the dip. So far the market has been weak and has not been able to put together a move to the upside.
The market must successfully hold the 50-day moving average to maintain the uptrend and if the 1325 area is broken on a third test, then support at 1319 will be key. Support is also seen at 1309.50 and 1290.50. Resistance overhead is at 1356, 1376.10 and 1382 on the June S&P futures.
After breaking out of a two-month consolidation in March the market was on a steady uptrend until the end of April, after it completed three waves up on the daily chart and began another consolidation. For almost three weeks the market has been locked in sideways trading, with ADX (average directional index) dropping to confirm.
The marginal new and 20 day high of 1382 made on May 13 did not follow through, setting up a Raschke Turtle Soup or Trader Vic 2B top, a short term sell signal. We have put parallel red lines on our daily chart at 1380.10 and 1319.00, defining the trading range. Chart is posted to the site.
We analyze the S&P 500 stock index and Treasury bond futures because they are two of the most closely watched financial futures contracts traded around the globe. They lead the market during the U.S. market hours and overnight trading sets the tone for the open in New York. They are traded by some of the most sophisticated institutions and traders. What happens in the trading pits in Chicago has tremendous impact on the underlying cash indices and interests rates.
Individual investors can take advantage of index-based investments by visiting the NASDAQ Amex market site to research SPYDRS, Dow DIAmonds, and NASDAQ 100 QQQ at options.nasdaq-amex.com
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