Market Analysis for Apr 2nd, 2004

Here we are with two hours left in the session, and the E-mini June S&P is sitting at roughly 1140 with a high this morning right after the employment data came out of 1145. If you look at a chart that goes back to the last week in March, you'll see the 45-degree trend and channel work that's emerged from the lows on March 24 at 1084.75 into today's high at 1145. Until that channel is broken or otherwise irreparably damaged, we have to go with the upside and the continuation of the prevailing dominant near-term trend.

So it looks like the high of 1145 on one side and the intraday low after that high was established at 1135 are the bookends for the day. That's 1145 to 1135, and we're at 1140 right now, which is right in the middle of the range and we've been there for the last five hours. So, chances are we still stay within that range for the next hour or 90 minutes, and then the fireworks will begin. Will people buy into the positions going into the weekend, or will they decide to take some profits?

It's a good question. All my work is telling me that if we pop out of the top of the range -- and it looks like the pattern supports another move up -- the top of the range would be around 1150-52. That is where the top of the channel comes in, and it looks to me as though if that happens that will put a lid on price movement on the S&P for the entire upmove from 1084.75 on March 24.

If, in fact, the S&P moves to a new high but fails to sustain up there above 1145, then we have to be careful and look for a move back down to 1135. That is where the key level is for any pullback or decline from here on out. A break of 1135 more than likely will lead to an increase in liquidation and will signify the end of the move up from March 24.

With regard to the QQQs, they are at 37.01 as we speak, and they've made marginal new highs. The high after the employment data was 36.97. The Qs pulled back to 36.53 and are now 50 cents higher at new highs for the post March 23 move.

The top of the channel in the Qs is 37.10-.20. That is where our work suggests that a lid will be put on this move up from the low on March 23 at 33.97.

So anyone long the Qs should look to scale out, take some profits between 37.10 and 37.20.

If the Qs reverse, then a key level on the Qs initially is 36.80 and then this morning's pullback low at 36.53. A break below 36.53 would argue that the upmove from March 23 is complete.

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