Trader Mike

We saw sellers defend the 200-day moving averages (and other resistance levels) again today. I don’t know what caused the afternoon selling but it wouldn’t surprise me if it was related to options expiration.

The Nasdaq spent a good part of the day hovering right around its 200 DMA before popping several points above it. But that turned out to be a head-fake when selling kicked in at 2:00. The result was a shooting star candlestick that closed beneath two important levels — the nice round number of 2,500 and the 200 DMA. As I noted in the chart, today will go down as an up day on higher volume but the real volume surge was due to late-day selling.

The S&P failed today near last week’s highs. The index has spent this month coiling between resistance around 1422 and its March trendline, which is quickly rising toward 1422. So I continue to watch for one of those lines to break.
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The bulls liked this morning’s CPI report and are pushing the futures higher. So it looks like the Nasdaq will gap over the little double-top it formed last week at 2500 and make a move for its 200-day moving average. The S&P will open beneath last week’s high near 1422 and will need to clear that resistance before tackling its 200 DMA.

On Today’s Calendar:

• 10:30 — Crude Inventories

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:
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It may be worth paying special attention to the retail sector today since the better than expected April retail sales report has given the futures a boost this morning.

On Today’s Calendar:

• 10:00 — Business Inventories

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:
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Buyers really seemed to be on a mission today as they took the market up from the open and pretty much never looked back. The one problem with today’s impressive price gains was that volume was on the light side. The big tests I see coming are the indices at their 200-day moving averages. I think we’ll need much more volume to make it through those important resistance lines.

We saw how the Dow failed at its 200 DMA last week. It looks like the Nasdaq is going to try its luck with its 200 DMA soon — it’s just over 1% away.

The S&P is bouncing right off of its March trendline. That line and the 200 DMA are on a collision course to meet around 1425 in the next couple of weeks, so one of those lines will have to be broken soon.

The small caps look similar to the S&P after climbing back above their March trendline.

All the short-term trends flipped to up today.

I’m surprised there’s not a decent sized drag on the futures this mornings due to FedEx and their sneaky, late Friday warning. I guess strength in the dollar is outweighing the FDX effect.

On Today’s Calendar:

• None

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:
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It’s looking like a rough end of the week for the bulls thanks to AIG, FNM and surging oil. Those who got caught in yesterday’s choppy session may want to read Dr. Brett’s tips on how to identify a range-bound market. The advance/decline line is one of my favorite things to watch intraday and yesterday it clued me in early. After watching it flip from positive to negative & back to positive within the first hour I had a feeling that it was going to be a choppy session.

On Today’s Calendar:

• None

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:
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The retail sales numbers from the likes of Wal-Mart & COstco are boosting the futures a bit this morning.

On Today’s Calendar:

• 10:00 — Wholesale Inventories

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:
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The sellers stepped their game up today and wiped out most of last Thursday’s gains. Yesterday I was surprised that stocks traded opposite the dollar. That dynamic continued today and oil traded up along with the dollar. I’m not sure what to make of that but it is a notable change of character. What I do know is that the indices are heading for some important support levels.

The Dow dove 1.6% after toying with its 200-day moving average for the fourth session in a row. 12,850 looks like an important level because the March trendline crosses February support/resistance in that area.

The Nasdaq is also closing in on its February high, which should be support.

The S&P actually slipped back below its February high today but it’s still above the upward sloping March trendline.

All the short-term trends flipped to down today.

On Today’s Calendar:

• 10:00 — Pending Home Sales
• 10:30 — Crude Inventories

More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic

Potential swing trades:
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The market had a change of character today. Lately the indices have been trading the same direction as the dollar but today they went in opposite directions. Logic might dictate that the broader market *should have been* down with oil popping to a new high today. But what’s logic got to do with anything, especially in the short term…

We had some good example of past resistance turning into support today on the indices today. An early selloff turned into a buying opportunity right around last week’s breakout points. All of the indices look ready to test their 200-day moving averages, led by the Dow which actually traversed its 200 DMA today. I expect the bears to really put up a fight at those important moving averages so the next several sessions could be quite interesting.

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