By Andrew Nyquist
On April 3rd I did a chartology on the S&P 500 in which I wrote: “Decision time! A sustained break above 1425 may elicit a run to 1450ish. On the contrary, the current [near term] pattern looks a bit like a rising wedge, so a break lower could bring a retest of the 1375 breakout area.”
Well, after Friday’s disappointing March jobs report, stock market futures are indicating that the equity markets may gap lower at tomorrow’s open… As such, many are already wondering if this is the pullback that everyone has been looking for? In fact many are bracing for an ugly open. If this sentiment carries through the night it may actually serve to temper the opening downside (as negativity could fade into the opening bell).
But truth is, the jobs report was just “noise,” and we will not know the character or the extent of any selling until we see it real time tomorrow a.m. Either way, the futures (ES) already touched into the 1370-1375 area on Friday. This “toggle area” could set up as an early pullback war zone… Make no mistake, the market has a memory (read S&P 500 Eyeing 1375? and The Importance of the 1380 Toggle).
Also, this is an area where the shorts got trampled and the bulls ran amuck in early March. Knowing this, I wouldn’t be surprised if bulls look to buy into this area upon first approach while relieved bears may look to “take some off.”
IF the markets decide that lower is in the cards, here are the levels to watch: 1) 1371 – 1377 –> this area finds a confluence of support: uptrend line, 50 day moving average, 2011 highs, and March breakout area. 2) 1338-1344 –> The market toiled here for the first half of February in a tight range. It also marks the early March low and pivot higher. 3) We have no business looking any lower without Monday’s open, but 1290 is the .382 fib retrace from annual low-high: 1074-1422.
So, there you have it. I’ll be back with some follow up technical analysis and commentary on Monday/Tuesday. Watch the levels, stay plugged in, and trade safe.
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Twitter: @andrewnyquist and @seeitmarket Facebook: See It Market
Position in S&P 500 related short index fund SH.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.
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