Monday, March 23, 2009

The Weekly Trade 3/23

Last week ended with a modest pullback back into the 760s on the SPX. After going up 20% in two weeks we were due for that anyway and as soon as we hit the 800 resistance level the sellers showed their faces. Going into this week I am looking for a test of that the 741 area and then perhaps a bounce higher to see if we can challenge 800 again. It should be an interesting week nonetheless, as we are inbetween two key moving averages, the 20 day ema sits at 757 and the 50 day ema sits up at 792. I think 741 is the most important area to watch going forward. If we hold it I am bullish, period.
Like I said the 800 area is pivotal as well and if this market is as strong as it shows signs of being then we need to see a close back over 805 and then start seeing more up 5, down 3 type of weeks instead of the reverse. We could spend some time even consolidating in this range as the 50 day ema is now flat and not showing much direction.

Economic data this week is fairly light and includes:
Monday- Existing Home Sales

Wednesday- Durable Goods Orders, New Home Sales

Thursday- Jobless Claims, Q4 GDP

Friday- Personal Income and Spending, Michigan Sentiment

As for Monday, we are gapping up Sunday evening and look to open higher in the morning. If the gap is less than a 100 Dow points then we will probably attempt a gap fill. If we stay over the pivot point then they could push this thing higher and surprise some bears. But I will start neutral and watch the 15min chart to gage the directionally bias of this market to start the week. The pivot is the line in the sand and it is at 770. Trade safe.

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