Market Analysis for Apr 7th, 2004

Nearing a Possible Minor Low
By Mike Paulenoff,

(Editor's Note: This is our last Mike's Mid-Day Minute for this shortened holiday week. A good holiday weekend to everyone!)

The indices are under pressure again since Monday's highs. The E-mini June Nasdaq peaked on Monday at 1511. So far today we have a low of 1477 and right now as we speak we are at 1483. The majority of my short-term work is arguing that we're nearing possibly a minor low, and an afternoon rally that could retrace a lot of today's weakness. We happened to have covered our positions earlier in the session to take advantage of the decline, and now we're on the sidelines watching to see what develops.

The pattern argues for one more minor new low in the E-mini June S&P into the 1136 area. Right now we're at 1139 or so, and we've been trading sideways for about an hour. A move back above 1141.50 would argue that we've already seen a low for this particular downleg, and this particular downleg has stretched from Monday's high at 1149 , to today's low at 1137.

So once again above 1141 , we will have seen a minor low and are in the midst of a recovery rally. Or perhaps we'll see a marginal new low for the entire move at 1136-35, prior to what we think will be a rebound rally from that level.

So right now anyone short the indices should be careful. However, we do not as of yet have a signal to reverse and to established long positions.

Over in the QQQs, they're trading like the Nasdaq as always, and made lows today so far at 36.66 off of Monday's high at 37.50. The Qs have carved out a sideways pattern for the last two hours between 36.80 and 36.66, and while our work argues for one more new low into the 36.60 area, maybe 36.50, the Qs, too, look like they're pretty well sold out for the time being.

A move back above 36.85 would likely argue that we've seen a minor low at 36.66 and will have some sort of recovery rally later this afternoon or into the closing bell.

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