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Lack of Selling Pressure Continues
By Mike Paulenoff, MPTrader.com

If yesterday was a fascinating day if only because the markets went straight up like a rocket after they broke key resistance levels -- for instance, 1100 in the E-mini June S&P and 1396-97 in the E-mini June Nasdaq -- today is equally as fascinating because the indexes remain up on the day. They certainly are not up nearly as much as yesterday, but there once again seems to be no selling pressure.

Although the indices may be tired on the upside, there isn't a lot of selling pressure coming in to work off the overbought condition by pressing the prices lower. What the indices are doing, in effect, is working off the overbought condition in a very tight, high-level, sideways trading range. That potentially is a very bullish sign for more upside.

Having said that, keep in mind in that the E-mini June S&P is up from Wednesday's low at 1084.75 to today's high at 1113. That's 2 , % -- a big move in 2 , days.

Nonetheless, the index is holding up well and seems to be in another high-level congestion area for the last two hours.

As far as our work is concerned, as long as it stays above 1109 into the final hour of trading, my suspicion is that there'll be one more thrust to the upside into the 1114-15 area, a marginal new high. At that point, if it does not sustain up there, then I think you will get the downside correction or pullback that will work off the overbought condition in a way where the price action actually declines and probes lower support levels.

If that happens to be the scenario, then we'll go to around 1115 and then pull back to the 1105 area, and perhaps even into 1100 area early next week.

Over in the QQQs, they're holding up extremely well also. Right now they're trading at 35.41 with a high of 35.58. That 35.58 is just shy of the March 17 high of 35.62, which was last week's high in a range of failed rally peaks in the 35.50-.60 area.

So if Qs manage to take out 35.62, we could get another bout of serious acceleration to the upside.

Today's pullback low of 35.24 becomes a key area for any minor weakness later in the session. As long as 35.24 contains any pressure, an upmove in the last hour, for instance, that takes out 35.62 should propel the Qs to 35.90-36 as the next micro target for this rally.

If that should be the scenario, my work will indicate that the upmove from Tuesday's low at 33.97 to a high around 36 will be a completed upleg in the initiation of a much larger recovery rally phase that probably will move towards the March highs in the 37.10-.20 area.

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