Sunday, April 5, 2009

The Weekly Trade 4/6

As we go into a new week of trading we had last week close above some really important technical levels. 800 on the SPX was breached and held for a weekly close. This level is now a pivotal support for this market and should dictate the trend for the next several months. Moving into week I want to keep an eye on the daily moving averages which are also right at that 800 mark and also looking at the weekly chart pictured you can see we are nudging up close to the 20 week moving average. That sits at 850 presently and is beginning to flatten out. It could provide some resistance for the market this week but if the market jumps over it then I think its a major hurdle surpassed.

If we rally thru that resistance then the next few months should be a fairly bullish time for the markets. I drew a fibonacci retracement form the move down from early Feb. to early March and the 127.2% extension of that move shows us at 930 and the 161.8% extension shows us at 1002 on the SPX. These are just potential areas where the market could rally to into the summer months in my opinion if the current rally continues. Using fibonacci extensions is a useful way to look for price targets based on the prior move.

Economic data this week is light and includes:

Tuesday- Consumer Credit

Wednesday- Wholesale Inventories

Thursday- Jobless Claims, Trade Balance

For Monday I want to have a bullish bias and look for the 830s to hold as support as the market perhaps makes a trip into the 850s. The pivot is at 835.25 on the ES futures and price is at 841 right now as I type. If this market can grind higher above this area then I would fully expect to see 876 this week. Below the 830 area and I would be looking for a bit more of a pullback into the low 800s. But my bias is higher. Trade safe.

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