Market Analysis for Mar 30th, 2004

You couldn't ask for a quieter day, which we attribute to the end of the quarter, the end of the month, and perhaps even the prospect of intense volatility up the road at the end of the week on Friday morning when the March employment figures come out. Nonetheless, from a week-long perspective it is quite remarkable that today's action is so quiet, in that the E-mini June S&P is sitting at 1122, 40 points higher than where it was a week ago.

The pattern is telling us one thing -- that it is still intact. The uptrend off the March 24 low at 1084.75 remains intact, and as long as the 1117-1116 support area continues to contain any weakness, our work is telling us to expect one more pop into a target zone of 1126-29 final target for the upmove that began on March 24.

The reason why I think it's a final target is because the pattern from March 24 looks like it's nearly complete. Our momentum study suggest the market is relatively tired even though there is no selling pressure. So if our scenario works out and we get a marginal new high above Monday's high at 1123.50, and go to maybe 1126-29, and then we'll get some downside, probably into Friday morning's economic data.

Of course, if the S&P fails in the last two hours of trading today and breaks and sustains below 1117, then all bets are off for a new high, and the correction we're looking for into Friday morning already will have started.

Over in the QQQs, a similar pattern has developed. You still have the March 23 low at 33.97. You had yesterday's high for the upleg at 35.96. So the Qs are $2 higher than they were a week ago, and since yesterday morning's high, the Qs have pulled back to a micro pullback low into the 35.50 area. As long as the 35.60-.50 area contains the weakness, then our work tells us that similar to the S&P the Qs should pop to one more new high into the 36.05-.20 target zone, after which we think there'll be a more substantial pullback into Friday's employment data.

If we get a sustained move below 35.50 later this afternoon, all bets are off for one more pop to new highs. So all the indices right now are treading water at a very high level, which usually is a precursor to another spike to the upside.

In this particular case, though, those spikes should put in the end of the weeklong upmove.

For more of Mike Paulenoff, sign up for a FREE 30-Day Trial to his E-Mini/Index Futures diary at. Or try his QQQ Trading Diary.