Midweek Triple US Index Daily Level Check April 17

Apr 17, 2012: 4:13 PM CST

The week so far has already been active in both directions between short-term EMA support and resistance levels.

Let’s take a look at the market action – and chart structure – as the mid-week approaches.

What price levels are most important to suggest trading strategies from here?

Let’s start with the S&P 500:

For reference, in each of the “Big Three” US Indexes, I’ll be focusing on three main levels:

  • The Current/Immediate Support
  • The Next Immediate Lowest Target
  • The Downside Target if these Levels Break

Before we discuss downside levels however, it’s important to note bullish upside targets which triggered today in the Dow Jones and are one day away from a bullish trigger in the NASDAQ and S&P.

For the S&P 500, there was a quick bull trigger above the falling 20d EMA at 1,386.  This also took out the recent minor high as well.

I color-coded all charts to highlight the Bullish, Neutral, and Bearish levels in the event price moves into – or continues traveling through – these levels.

The immediate level to watch on the S&P 500 is the “Round Number” 1,400 resistance, though 1,390 is also a reference point to watch Wednesday.

The market is bullish short-term above 1,390 and triggers a breakout buy above 1,400 which could lead to a retest of 1,420 (2012 high) or even 1,440 (the May 2008 high).

With those upside game-planning levels in mind, let’s turn to the bearish levels to reference IF the market does fall/reverse under 1,400.

The first should be obvious – it’s a polarity level from the confluence of the rising 50d EMA and February high:  1,370.  That’s where today’s rally emerged.

In the event 1,370 fails as a support level, look to the 1,340 zone.

A deeper retracement would trigger IF the index broke under 1,340 which would open the market for downside targets of 1,300 (round number) and then 1,275 (the 200d SMA and prior resistance level).

Though the numbers are different, the structure (and levels) are similar in the Dow Jones:

For quick reference, the Dow Jones triggered a price-resistance and 20d EMA breakout buy signal today and could continue creeping its way back to the 2012 high of 13,211.

Unlike the S&P 500, the Dow Jones crested briefly above its May 2008 high of 13,136.

We give a little bit more flexibility with levels on the Dow Jones – 13,200 is an important easy-to-remember key reference.

13,000 is not only a major ‘psychological round number,’ it’s also a recent price polarity level (meaning this level served as both resistance AND support) and the rising 20d EMA.

What levels become important IF the Dow Jones breaks under 13,000’s support?

There’s a minor – but important – pivot at 12,700 (similar to 1,340 in the S&P) and if that fails to hold, it opens the door for a deeper retracement towards the 12,200 price and 200d SMA confluence (similar to 1,275 in the S&P).

And finally, let’s see the structure and similar levels on the tech-friendly NASDAQ Index:

It’d be nice to call 3,000 the simple reference – and you could – but it may be more precise to label the current NASDAQ pivot level at 2,990 (it’s the 50d EMA along with the prior swing high into 3,000).

The NASDAQ triggers a bullish buy above the falling 20d EMA which currently rests at 3,042 – above this (you could use 3,050 as your easy-reference), we could see 3,134 (2012 high) revisited again.

With those support (2,990/3,000) and upside target (3,130) levels in mind, let’s turn to potential downside support targets on a retracement from here.

The first one would be 2,900 – that’s easy enough – and then on towards the 2,700/2,750 region (price polarity and the 200d SMA).

While traditional odds (at least from the charts) favor a further downside move, we have to be on guard and ready to adapt to any bullish surprise the market continues to throw at us.

Remember – we’re traders (masters of probability), not fortune-tellers!

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!

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Comments
  • The $SPX hig of 1,576 in 2007 was an Elliott Wave 5 High. The $SPXof 1,4222 in early April 2012, was an Elliott Wave 2 Up. The S&P, traded by the ETF, SPY, entered an Elliott Wave 3 Down in April 2012, and as the world entered into the Second Great Depression. The Third Wave Down is  the most destructive of all economic waves as it destroys most of the wealth built on the prior 5 waves up.  And in as much as Global Eurasia war is  imminent in  Syria and Iran, mankind is going to enter into the most horrific period of human history.

    Today April 19, 2010, was Capitalism’s Waterloo as the charts of Volatility ETF VIXY, TVIX, VIXM, all show a rise today, on a pivot lower in world stocks, VT, and US Stocks, VTI, as jobless claims, existing-home sales and manufacturing in the mid-Atlantic region all suggested that the robust start to 2012 seems to have lost momentum.

    The declines also reflected significant drops in many European markets after an auction of Spanish bonds was oversubscribed but produced slightly higher-than-expected yields.
    Transports, IYT, and  Industrials, IYJ, both traded lower today giving Dow Theory confirmation that the bear market that began this month is definitely underway. Transportation Shares, IYT, traded 1.5% lower, and Industrial Shares, IYJ, traded 1.1% lower.

    Shares leading the way lower today included Steel, SLX, Housing, ITB, Small Cap Pure Value, RZV, US Infrastructure, PKB, and Large Cap Growth, JKE.

    Large Cap Growth shares trading lower included QCOM, NEU, AAPL, CAT.  Apple, AAPL, -3.2%; shares dropped below $600 after Verizon Wireless said it had sold 3.2 million iPhones in the first quarter, down from 4.2 million in the fourth. The Nasdaq 100, QTEC, Technology, XLK, and MTK, traded lower.

    Spain’s BBVA and STD led European Financials, EUFN, Spain, EWP, Italy, EWI, Greece, GREK, France, EWQ, lower.

    Emerging Markets, EEM, the BRICS, EEB, China Industrials, CHII, Steel, SLX, which turned lower in March, continued lower today.

    Performance of Proshare 200% inverse ETFs this week include EEV 3.5%, TWM 2.1%, BZQ 6.5%, SSG 4.1%, SIJ,  1.5%, REW 5.7%, BIS -1.7%.

    Today’s trade lower in world stocks, ACWI, evidences the death of fiat money and credit, as well as capitalism. Confirmation of such comes from yesterday’s trade lower in Commodities, DBC.

    Much more commentary in my article  Capitalism Meets Its Waterloo … Stocks Pivot Lower On Spanish Bond Auction Yield, As Well As On Job, Home Sales And Manufacturing Reports, is http://tinyurl.com/7cc5azq

    Best to you

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