Market Analysis for Apr 12th, 2004
Essentially we've had a very narrow range today in all the indices. We are closer to the highs than we are to the middle of the range, and the markets have for the most part reversed the minor damage that was done last Thursday afternoon ahead of the close of that last trading day of the week.The two patterns in the E-mini are different. The more bullish of the two patterns is in the E-mini June Nasdaq, which is trading at around 1495 right now. All the action from last Monday's high from 1511 into where we are right now has taken the shape of a high-level flag or wedge pattern.
When you look at the pattern in relationship to the entire rally off the March 24 low at 1365, what you come up with is a bullish pattern for the past week that should resolve itself in one more thrust to the upside to conclude the entire move up from March 24. Weakness this afternoon even into 1480 is acceptable as long as 1480 is not broken and absolutely as long as 1477 is not broken.The pattern that we're looking at will remain intact and even if we have minor weakness this afternoon, as long as the 1480-77 support area remains intact, the overall pattern remains the same and we'll still be looking for a thrust to the upside within the next day or so to the 1520 target zone. If 1477 does break, it's a different story, and instead of looking at a sideways bullish congestion, in fact we'll be looking at a pattern that's morphing to a top.
But we'll cross the bridge when we come to it. Right now, suffice it to say that 1480-77 is key support and we're still looking for a pop to the 1520 area in the E-mini June Nasdaq.
The E-mini June S&P does not have a triangular or wedge-type high-level congestion area. It has a more non-descript pattern off of last Monday's high at 1153 ,. Having said that, as long as 1138 remains intact on any relative weakness that comes up over the next several hours, we expect to see the E-mini June S&P to try to get through 1146 ,, which is the high of the day. If so, then it should accelerate to test 1153 and perhaps even 1160.
Only a move down that breaks and sustains below 1138 will kill this pattern and will reflect a top formation on the entire upmove from the March 24 low at 1084.75.With regard to the QQQs, they are trading right now at 37.10, and have been trading between 37.05 and 37.20 for the last four hours. That's also within a sideways congestion pattern from one week ago, and that pattern also has taken the shape of a wedge or high-level bull flag pattern, which projects to an upside thrust that should get to around 37.70-.80, perhaps even to 38. That is barring a move down below 36.66, which is the low from last Wednesday.
If 36.66 breaks, then similar to the E-mini June Nasdaq, we'll be looking not at a sideways bull flag formation that has another thrust to it, but we'll be looking at a minor top formation that will weigh heavily on the price structure.
So for now we're bullish. The move off the March 23 lows at 33.97 remains intact. That upleg is not over as far as we are concerned and we're looking for one more pop towards 38.
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.