It's a conflicting world out there and not easy to gauge. Investor sentiment is in the upper range at 2.53, bears at 21% and bulls at 53.3% link Not frothy optimism but enough to put bulls slightly on guard (note the downward trendline of highs). ISEE is closing on the low side (good for bulls), but did see some opening pops this week above 200. Nevertheless, slightly more bearish overall, which favors bulls. CBOE equity put to call is at .57, moderately optimistic. Go figure. The VIX is down in complete no-fear zone, but it could also be in "no interest" zone. It's a tough one, so we need to look at price and remove bias. Today's sell-off did not have the closing legs many thought it would (myself included). The DOW found support at its 20 DMA as did NDX and the bounce was convincing enough for bulls to stay in and bears to worry. Even the BIX, which of all sectors was supposed to get hammered the most today, held on to its 10 DMA. However, this is just one day and financials need to show their stuff in the coming days. If the BIX drops 400, the bears will charge and you can bet the markets will get spooked. Bulls need to get ES back above its 5 DMA at 1454 or we are going to head down and retest 1447 and ultimately 1443/1444, weekly pivot. Remember that failures at monthly R1's lead often lead to reversals to the closest weekly pivot readings below. YM showed the way and tested its weekly pivot at 12640, ES will most likely do the same at some point. ES monthly R1 is 1456.25. Between that and 1454 lies your resistance zone. Trade it accordingly. As for the YM short at yesterday's highs, evaluate your time frame on the trade. In any case, your stops should be no higher than 12716. I had targeted 12585, the low was 12602, so I might have been a little too optimistic and not given you the right exit. Let's see what gives tomorrow, but they did bounce the DOW off 12577 and that might mean closing the short trade if it doesn't get legs again. What I do like about the trade is that YM is back in the wedge with 5 DMA curling down towards the 10 DMA, indicating a possible trend reversal. If we do head down again, forget 12585, the target would be channel support at 12526. An upside break above 12710 could set up new highs and 12764, so be disciplined with your stops. The long side could get help from the energy sector with QM bidding above 60 after-hours. It could also restrain techs and retailers.
As for NQ, it's getting ready to break out above 1825, but until it does expect some chop. BRCM seems to be running well after-hours, that will help. If bulls can't fly with that one, there are not many catalysts left.
As for NQ, it's getting ready to break out above 1825, but until it does expect some chop. BRCM seems to be running well after-hours, that will help. If bulls can't fly with that one, there are not many catalysts left.
This entry was posted
on Thursday, February 08, 2007 at 2/08/2007 08:02:00 PM.
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