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After a nice opening rally, we got a solid reversal at NQ Daily R1 and monthly R1 (1737). When you get that kind of convergence, play it. Add 61.8% 2006 at 1739 and you have way too many levels of resistance in synch to not have sell programs kick in. That said, NQ found closing support above 1722.50, now an area it must hold tomorrow. The other one to watch is still COMP 2333 and the obvious SPX 1300. My focus is on the somewhat awakened techs, so I am keeping a close eye on COMP, NDX and SOX (503.60 especially). Other than that, it has been a buy support sell resistance market with no clear trend. The one notable exception is YM (DOW futures), now finding resistance at the 20 dma (11232) and that is bearish. BIX (banks) has also broken support at 369.85, but that was to be expected with the yield jump. Lots to keep an eye on, but realize that GOOG gets added tomorrow at the close to SPX, skewing just about every indicator in sight.

GOOG under pressure pre-open as the company offloads 5M shares. Best Buy earnings are due for release today and will be market moving, especially for techs. Watch oil as it seems to catch a never ending bid with some more Iran news, even though crude inventories rose to 1999 levels. When will this circus stop is anyone's guess, but when it does, oil will correct pretty strongly.

COMP reaches multi-year highs, now needs to hold 2333. Rotation into techs (bullish). Watch the SOX, which is not reaching new highs. Nevertheless, still above 503.60, 38.2%. But you have to wonder how much power we have left once end of quarter shenanigans are over.

Let's call it the Google bounce. S&P tracking funds have to buy GOOG, which is why it is soaring as speculative hedge funds try to buy it and turn it around for quick profit. However, you can see that SPX/ES is lagging, because these very same funds have to make up an extra 70 billion to pay for that stock, as the outgoing Burlington has only a 30 billion cap (GOOG is at 100 B). In other words, they are selling other SPX stocks to get ready to pay for GOOG. The fundamentals have not changed for GOOG, so don't get married to those gains.

Feds were no help and the overly optimistic market got spanked. Crude oil added insult to injury, breaking above 50 dma resistance and hitting 66. When things get bad, I like to pan out to the COMP daily. So far, nothing alarming yet as it holds on to 10 day ema and March trendline support. Today's lows must hold in order for bulls to show they still mean business. Remember that we still have end of month / end of quarter window dressing and that could be supportive. In a rising rate environment, if you must go long I suggest you stick to techs and small caps.

May oil futures breaking out above 50 day moving average (64.675). If that holds, there is upside risk to 65.65.

ES, YM and NQ holding on to their 10 day exponential moving averages. Bulls are still in charge and we are seeing some rotation into techs as the SOX closes above the all important 503.60 mark, but barely. You get the sense that the whole thing could fall apart in a Fed second. Trading these events will give you whiplash, but I watch ZB ticks (30 year bond June futures) right after the announcement. Monitor the banks as well as they seem to be overdone on the "Fed will end soon" play. However, keep in mind that any selling coud be short-lived as we are also dealing with end of month/end of quarter dressing.

Intel (INTC) found support on Friday at 50% projection 2005 high and October low. As long as that holds (19.31), the stock has potential to retrace to 21.

On hold for the Feds. ES chart about the same, while NQ finding new resistance at 50% Tuesday's range (1700), still the dominating session of the past week. Place your bets using weekly S1 or weekly R1 if hit. For NQ, that would be 1726 or 1670 and ES 1321.50 or 1304.50. Hopefully, you play the reversal with some cushion. Gold will be of particular interest and might give some clues.

Nice selling, but ES still stuck in Tuesday's wide range. 50% is 1313.25, so watch that for any sign of bullishness. Wait for a 30 mn candle close for confirmation.

QM (May oil futures) catching a bid in the overnight session. Resistance is at 62.60, 62.85/62.95 and 63.35. Support is 62.10.
How the markets react to a big oil rally tomorrow (if it happens, and it sure looks that way) is anyone's guess. Again, watch YM 10390, ES 1316, NQ 1695 and yields. My feeling? Today's rally was hedge funds jamming the shorts and they can bail as fast as they came in. Careful out there, folks.

With all the drama surrounding techs, it's interesting to note that the SOX did not violate last weeks lows. The chart is bearish below 503.50, but keep an eye on this index. Today's action caught many shorts by surprise (including myself) and this can snowball into further buying. Conservative traders might want to step aside from the bullish wagon until we see NQ clearly get back above 1700 and the SOX above 503.50. If long, tighten your stops. For ES that would be no lower than 1313 and for YM 11360. If short from yesterday's highs with NQ, you are in the driver's seat and should lower stops to 1711. If short ES, things are getting much tougher and I would place stops at 1319.25. As for YM, scalp only.
Watch yields as you trade throughout the day. They are key to establishing positions. Short if yields are up and long if yields are down. Watch ZB June contract (30 year) for heads up.

ES 1316 was sold and NQ could not re-conquer 1696, a very important level. Not much ammo for bears, that's for sure, but it leaves the door open. However, end of quarter noise coming up and that seems to be what is starting to happen. Don't expect too many "analysts" to come out on the sell side before then. YM closed just below 11390, another key level but the May 2001 high for the DOW was 11350 and we are only 33 points away. The SOX was red for most of the session, dragging in just enough shorts to create a wall of worry that was punched through, but techs are still a sorry lot. Looking at bonds today, it seems some are not on the Bernanke camp and we could get back to worrying about excessive Fed hikes throwing us into a slowdown. Ride with the bulls, but keep those stops very tight and don't hesistate to flip short.

Bulls are cloobering shorts in YM and ES. NQ still down in the dumpster and it seems we are back to rotating out of techs. If NQ closes above 1696, it will be a victory for bulls. YM is getting very bullish and that one should be avoided if shorting. ES attacking 1316 as I type. What a comeback, let's see if it closes above that level.

Despite the media hype, as long as ES stays below 1316, YM below 11390 and NQ below 1695, bulls are not back in full control. SOX is struggling, but financials making a comeback of sorts on the heels of the Morgan Stanley news. ES can't keep a 50% retrace going for long at this point in the day. Techs are looking weak once again, raising the red flags. My guess is more consolidation in the days ahead. There's a lot of money at stake so expect some press releases to the effect that the MSFT news is no big deal, so watch yourself if short.

Bad day for bulls. Traders who bought all the hype over the weekend must be wondering what happened as the door was slammed shut. The set-up was pretty clear, as profiled below:
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Bears are now in full control. What did bulls expect? New multi-year-highs with rising rates and financials down? It took a calm head to short the top, but reason has prevailed. Lower stops on ES short to 1316. If more conservative, lower it to 1313, now stiff resistance. Weekly S1 for ES is 1299.50, target on the trade. NQ should move down to 1675 if it can't close above 1696.

Danger now as ES does a perfect double top and NQ loses 1723 key support on the bounce. SOX also ran out of steam at 510. If we do one of these double flips and end up negative for the day, it will spook traders to no end and probably insure that we have put in a possible top for now. If short ES from highs (I am), lower stop to 1320.50. Gold shorts should lower stops to 554.

Bulls pull out a massive reversal, hitting the shorts hard. NQ has resistance at 1729.

SOX is bullish, so if short be careful. Banking is down of course, so ES lagging.

Since the entire foundation of this rather suspect rally we've had rested in the fact that the Feds might ease soon, we could see some real selling on Tuesday. Watch ES 1311 key support followed by 1308.50.

Bernanke is a smart man no doubt, but trading today sure felt like a dumb thing to do. Nevertheless, one solid trade stood out an that was to be short oil. Aside from that, it was feed your broker day as the market toyed with support and resistance in classic schizophrenic fashion. Ok, let's be fair, we did establish the importance of 1316.50 for ES and 1706.50 for NQ. So all is not lost and we take up the same battle we have been having for three days once again tomorrow.
I did get one trade clear out of the Fed speech and that was to be short gold. I think that one is due for a 20 point drop.
Same parameters apply, watch for a breakout or breakdown of the frightfully boring inside day we have been having for ES since Thursday.

Intraday 4: the tide suddenly turned, led by ES losing 1316.50. SOX still green, so confusion reigns. I am not sure the bulls are quite done yet, so if short, tighten your stops. Scalp longs if you wish and wait for the right short setup. This is a game of patience.

Intraday 3: the oil (QM) short profiled over the weekend is doing gangbusters. You should lower your stops to 63.475 (May contract).

Intraday 2: Bulls are easing back into the control reins. ES above 1316.50, YM above 11361 and NQ knocking on 50 dma 1712. Setting up a possible run to 1718. Still looking very precarious, but the ADDEC line for NQ has been improving as VXN drops from 10 day ema. Es lagging a little due to the drop in energy stocks. It all feels toppy, but a short covering rally here is definitely possible. Watch SOX 495 suppport now.

Intraday: SOX is bullish and if ES can hold above 1316.50, shorts should be careful.

Should ES break out to new highs tomorrow, watch 1328/1329, confluence weekly R1 and 38.2% projection January H/L and a good short entry if you feel we are due for a pullback. Target would be 1311 then 1299 on a swing drop. Keep an eye also on SPX May 2001 high of 1315.93. Watch YM channel and 10369 resistance (chart). 10361 is also a key number.

Gold is bullish above 551.20 and bearish below. Should oil drop any further, easing concerns over inflation, YG (April contract) could lose that 50% 2006 support. I also think there is a real possibility that the Iranian crisis quiets down as talks begin. A breakout above 557.80 negates any short term potential bearishness.

Bulls charged, but still a question mark going forward if the semi-conductors and techs in general don't play catch up with SPX and the DOW.
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NQ (NDX e-mini futures) and QQQQ were the most orderly of the lot. If you shorted Thurday's highs, you have a nice cushion going into next week. The same can't be said of YM, probably the most jacked around index out there, due to its low margin requirements. I will post some charts over the weekend.

Solid bearish divergence for YM (DOW e-mini futures) at highs. I don't know if it means much today, but it could have an impact next week.

Doldrums indeed. Markets are range-bound with a bearish bias. SOX has not been able to regain its footing so far and option players are doing a solid job of pinning price. Watch oil, the only catalyst for minor swings. The SOX did find support at 489, a few notches above my 486 target, so don't count the bulls out completely next week if this is indeed a turn. Watch 500 level.

We continue to see strong put interest at QQQQ 41 strike, setting up support there tomorrow. We could be stuck in the doldrums tomorrow after an intial bout of volatility. Oil prices on the radar, although this rally looks more like short-covering to me than anything fundamental.
SPX opened the year arounf 1248. Do the math: 3% growth this year realistically puts the index at 1286 year-end. That's the June 2001 high, by the way, and it seems we are getting a little ahead of ourselves. ES needs to hold 1310, NQ 1695. The real story however is the SOX hitting the skids (chart). Looks like 486 is next.

Unkillable ES still riding that 50 ema 10 mn chart. Keep an eye on that level. QQQQ 41.50 should now be resistance. No one hit the panic button yet, but that is one ugly reversal for the SOX and NDX.

Bears are slowly gaining control again, especially in techs. QQQQ below 50 dma now and looking weaker by the minute. SOX was the red flag. I have kept mentioning 511 resistance and like clockwork, it pretty much marked today's top. The day is not over, but bulls are definitely looking tired. Short ES from 1318.50 and QM May contract from 65.30 (or April 63.70). I guess the air attack in Iraq prompted some short covering in oil, but as long as we stay below today's highs, the pressure will remain to the downside there as well. Keep all stops tight, this is still option expiration week and if you wonder why you are experiencing severe trader whiplash, look no further.

Large bid on oil, taking April contract to just under 64, 50 dma. Sold off in the closing minutes, though. NQ and techs struggling and it's only a matter of time before ES and YM breakdown.

We dropped at resistance and gaps were closed. Bulls took ES back up but NQ still lagging as is the SOX. Watch out for a bid on QM (oil), shaping up with strong support at 61.70 area. Could take it to 62.45. That would support some energy stocks, but not techs.

A liitle overlap, but SOX is weak. NQ daily R1 sits right below 50% of this correction (1722.75) and that should be pretty tough. QQQQ above that, but it's NQ that counts. We should close those opening gaps. Keep an eye on SOX 511, resistance once again.

Bulls pushed ES and YM above weekly R2's. NQ (NDX e-mini futures) a consistent lagger, thus we will focus on the chart of QQQQ. As you can see, we closed above 50 dma and found resistance at 50% 2006 (41.74). That is the level to watch going forward, but judging from option open interest, it should serve as hefty resistance. Nothing is set in stone, of course, but you have to trade the odds and for this week they say we topped out. Things could be different next week of course. As usual, don't put a bias on this, as call resistance is much harder to define than put support during opex. So be careful if short and don't hesitate to flip it. NQ support is 1711 and use this as your guideline.

Bulls pressing on. If NQ can hold above 1711, next swing target is 1737, but that is a big if. This is still option expiration week and those guys don't play ball. SPY has many calls sitting at 130 and frankly, I doubt we hold that level by week's end.

Resistance at 1711, 76.4% recent correction. Watch SOX 511 for any sign of weakness. ES finding resistance at 1313/1314, confluence of weekly R2 and monthly R1. Add call resistance for SPY in this zone and a short should be a decent odds trade here. Tight stops.

True to form, QQQQ found resistance at 41.50 area. SPX is having a rough time as it approaches 1300. We could have one push for ES to 1313/1314 area, which I would short. NQ has potential to 1717, QQQQ 41.75, but that should cap it, unless the SOX does a convincing break above 511, which is not yet the case. A quick short of oil (QM) was done at 63.025 and exited at 62.225. Resistance there is now 62.55, target would be 61.75 should 62.55 not hold.

GOOG short covering (see my post a few days ago), option shenanigans (do you really think they were going to let you cash in on all those puts) and we have a rally to new highs for SPX and DOW. But no new highs for NDX, QQQQ, COMP and SOX. We knew that, since they have been lagging for some time, but it's still a red flag. Another red flag: the VIX. As you can see in the attached chart, everytime we have hit the lower envelopes, the markets have sold-off in sometimes brutal fashion. Caution. ES 1313.50 is a short target as is QQQQ 41.50.

Trade the range. SPX, NDX, QQQQ and SOX charts:
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Short squeeze on the way as NQ does a strong bounce off 1634, right below monthly S1. I targeted that area in my wrap last night and the trade is solid. SOX is still struggling with 511 resistance, and this is pre-opex, so again, trade the range. GOOG approaching an area of support between 320 and 330.

SOX has fallen below 511 key support and is now hanging on to 38.2% October rally at 503.50. The loss of this level (503.50) would set up a very likely move down to 481/486. However, expect NQ (NDX e-mini futures) to bounce hard at 1636, monthly S1 and close enough to QQQQ 40. More calls have started piling on to QQQQ 41, and although it is still "max pain" and a magnet, it is also shaping up as resistance. There is large put support at 40, so the range is tightening. As I mentioned earlier with GOOG, we are getting near a point where we could get a nice short-squeeze.

GOOG falling into that large October gap and barely holding on to the 200 day exponential moving average at 343.50. I have warned for some time about this gap and odds are we will start working on closing it (303.20). Note that sometimes large gaps don't get filled at once, so I have drawn Fib retraces. 50% of gap is 325 and I expect that to be a strong support area. I would nibble at a long there, should 343 support not hold in the coming days and we do get that gap penetration. Bears need to be careful as March option activity suggests that the entire area below 350 is supported by large amounts of puts over calls, thus setting up the stocks for a potential short-squeeze rally.

Nice turnaround at the close. Both ES and NQ hit their respective weekly S2's with solid bullish divergences (see ES 60 mn chart). If ES can hold ground above 1277.75, the outlook is bullish. Nagging concern is the SOX and 511, keep an eye on that. As predicted, QQQQ 41 keeps on being a magnet, either from above or below. Expect that to be the norm throughout next week.

SOX (semi-conductor index) 511.18, do or die for techs.

Bounce at the close but not enough to ease concerns that we could see more downside. NYSE year lows outpacing year highs, another red flag. Keep an eye on SOX 511, ES 1272 and COMP 2260, 23.6% fib. I am not comfortable seeing that index below 50 dma at this point and bulls need to step up to the plate soon. However, as usual during the week preceding option expiration, be wary of any move lasting more than a day or two as rangebound trading confuses many. We should not stray too long from QQQQ 41 going into next week. One thing for sure, YM (DOW futures) is on a seperate path and that bullish divergence I pointed out yesterday still made for a good long trade from 10935. Just don't fall in love with it. 11115 should be stiff resistance. Financials helped, no doubt, as the BIX showed some green today.

Nice drop to SOX 511 key support zone, if it holds, NQ is a buy at 1655.

Under more pressure this morning. QQQQ needs to hold 40.90 (see chart). Overnight stops were hit. One note on this: when holding YM overnight, you should use conditional stops with a Globex index such as NQ or ES. The ECBOT stops are useless overnight.

VXN envelopes at reversal point. YM bullish divergence hourly chart, a long at 50 dma (10935/10936)confluence weekly S1 is a tentative trade, stop moved up to 10935. NQ and ES bounced off their respective weekly S1's as well. Support levels are now NQ 1666, ES 1277 and YM 10936. It's not very convincing, but QQQQ hit 41, that magnet zone I wrote about this weekend. SOX held 50 dma, but lost the trendline. We see what gives tomorrow.

A heavyweight firm now upgrades INTC to buy, after the minor players spent several weeks bashing it. Keep an eye on NQ 1697.50, key zone of resistance.

Gravitational pull for QQQQ as we head closer to option expiration, but a nice trading range setting up with plenty of opportunities. Right shoulder confirming on oil, should we stay below 64 (April contract). Looks like a great swing short setting up there, target 51/52, if 64 resistance holds.
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