Stocks remain strong. SPY is up 5.68% the last 10 days. A small indecisive candlestick formed after a gap up on the open. Even though potential resistance from the February high is close and stocks are short-term overbought, there is simply no let up in buying pressure. The turnaround over the last two weeks has been nothing short of amazing. This rally is probably a combination of bottom pickers, early trend followers and window dressers. The first quarter comes to a close today and underinvested managers may be active now. We also have the first day of the month phenomenon working in the bulls favor. Stocks have shown a propensity to rise on the first day of the month since the beginning of 2010. We also have the employment report on Friday and the bulls could be positioning ahead of this release in anticipation of positive news. Whatever the reasons, stocks are strong and the trends are up.
On the 60-minute chart, SPY gapped above its latest short-term resistance level and held the gap. Broken support and the gap produce the first short-term support level at 132, which is also confirmed by the blue trendline. For now, I will leave key support at 130.
Key Economic Reports/Events:
Thu - Mar 31 - 08:30 - Jobless Claims
Thu - Mar 31 - 09:45 - Chicago PMI
Thu - Mar 31 - 10:00 - Factory Orders
Fri - Apr 01 - 08:30 - Employment Report
Fri - Apr 01 - 10:00 - ISM Index
Fri - Apr 01 - 10:00 - Construction Spending
Fri - Apr 01 - 15:00 - Auto-Truck Sales
Charts of Interest: Tuesday and Thursday in separate post.
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This commentary and charts-of-interest are designed to stimulate thinking. This analysis is not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise). We all need to think for ourselves when it comes to trading our own accounts. First, it is the only way to really learn. Second, we are the only ones responsible for our decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. Among other things, this includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios BEFORE making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.
