Friday was a wild day, but understand once again the power of option expiration week. QQQQ was pinned right at 42 "max Pain" (largest total number of option open interest). Now that we are done with opex, bulls must maintain this level as it also corresponds to the 20 day moving average. SPX closed above 1310.88, and that is bullish, but should we lose that support level, we could very well see a test of its 20 DMA at 1300. These are dangerous times with the ten year note above 5% and oil at 75, so tread very carefully. There seems to be enough negative press out there to possibly hold up the markets, but should we start seeing optimism while techs break down further, lookout below. A usual, pay attention to the SOX, your canary in the mine. As you can see on the chart, we closed below the previously broken downward trendline. That is bearish. However, we did manage a bounce at 516, confluence 10 day ema and 50 DMA, obviously THE level to watch next week since it is also 38.2% 2006. Should the SOX lose 516 on a closing basis, the markets could be in for serious drubbing. Should it hold, we could see one more rally pop out of this tired bull market.
This entry was posted
on Sunday, April 23, 2006 at 9:16 PM.
