Tuesday, March 30, 2010

Morning Briefing for March 30th: Continuing the Range Trade



10:35 AM CT - Note the downside break that occurred from the range that had prevailed going into today's open. The inability to hold the move above the pre-opening lows led to selling that has taken us back into the thick of the multiday range. It's a good example of how a breakout move at one time scale is actually a mean reversion move at another. If we persist with a negative bias to NYSE TICK, I would expect a test of the multiday range lows around 1160.

As we can see, we're trading within a multiday range, with prices recently caught within a narrow range inside the larger range. We're also seeing mixed trading among asset classes, with not much movement from gold and oil. There's some strength in AUD vs USD but not much happening with EUR. I'm continuing to watch small cap stocks vs. the large caps and the Cumulative NYSE TICK; those should point the way toward how this range environment will ultimately be resolved directionally. More later this AM.
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1 comment:

Soberba Insônia said...

Doc, weekly talking there´s a clear Change of Guard pattern in candles and considerable volume, both in DJ and SP500.

Daily talking, prices are stagnant.

Bears are discharging a great amount of ammunition and bulls absorbing it - for while.

11K at the Dow Jones is a very strong zone that made its history in 2005/2006, when the market went through a long range.

This very 11k, due to its strong storycal strength, stopped the market from falling down for 3 months and in the middle of the crisis (2008).

Thinking in probabilities, I think there are great chances that this Resistence Zone the markets are will cause some trouble for the bull force really soon.