The close has NQ sitting right at trendline support, but any rally will have to deal with the wall of 10, 20 and 50 DMA confluence at 1802/1805.
There is some DOW stock news after the close (MMM share buyback) which could push YM above 12585, monthly pivot, when it re-opens. We are primed for a bounce soon, CBOE equity pc ratio jumped to .77 and ISEE is at 126. Not excess bearishness, but enough to give bulls a breather. The VIX is right where bulls want it to see a reversal, top of envelope is 11.89, we closed at 11.61. YM 12692 would be support after a move above 12585 and a buy if it holds. Lots of shorts out there, so we could get a squeeze any day. The problem for bulls and bears alike will be the heavy load of puts, especially in techs. Yes, there are very supportive during option expiration week, so bulls get an edge, but they can also usher in heavy sell-offs if events trigger a situation where put sellers need to cover in a hurry. Either way, it should be fun.
One word of caution: we have not hit weekly S1's yet (NQ 1775.50, ES 1434 and YM 12547) so there could be a headfake in store. ES came very close (1435), so maybe this concern is superfluous. But the way NQ is hugging that trendline might suggest one more push down, at least for techs. If all channels hold, bulls should get a nice bump.
This entry was posted
on Monday, February 12, 2007 at 2/12/2007 06:28:00 PM.
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