The bulls and the bears continue to battle it out…the Nasdaq remains the upside leader and is closing in on a very important test for both the bulls and the bears…their 50 day moving average (2665.73). If they can sustain trade above it I think that will add support to the entire market, but if they fail to hold then I think that will be bearish action and we could see the entire market selloff.
The Transports have been showing signs that they want to go higher but they keep failing to get back above their 10, 20, and 50 day moving averages…as long as they remain those moving averages I think that action favors the bears. If they can get back above those moving averages then that could add support to the entire market. The Dow has been trading below their 50 day moving average for the most since October…that is bearish action and as long as they remain below their 50 day moving average I think that will weigh on the entire market.
The VIX has now been holding above their 50 day moving average which is bullish action for the VIX and bearish action for equities. I will continue to use the 50 day moving average in the VIX as a pivot for direction and a lead for the S&P. The S&P futures and cash have been holding their daily uptrend’s but have been chopping around their 50 day moving average. They are not holding either side with any conviction…I will continue to use that moving average as a pivot for direction. If they fail to hold their daily uptrends then I think that we could see the market selloff…quickly.
Today I will be initially looking to see how we open around the daily pivot at 1372.00…if we open below it I will be a seller from the daily pivot up to the 50 day moving average 1375.16 where I will be looking for us to test the BOV which is also the Gap…down to support at 1360.50 where I will be a buyer. Failure to hold 1360.50 I will turn seller and then be looking for a test of their daily uptrend (1356.25)…failure to hold their uptrend I will then be looking for a test of support at 1348.75 where I will be a cautious buyer.
If we cannot sustain trade below the 50 day moving average I will turn buyer and I will then be looking for a test of the 10 day moving average 1378.10 where I will be a scalp seller. Above the 10 day moving average I will then be looking for a possible test of resistance at 1383.75 where I will be a seller. Have a great day!