Quick Daily Fly-by of the US Indexes April 28

Apr 28, 2010: 10:33 AM CST

With Tuesday’s sharp sell-off taking the US Equity indexes down roughly 2% each, let’s take a quick “fly-by” of the Daily US Equity Index charts to see what preceded the fall and what levels to watch as a reference now.

First, the S&P 500:

All three indexes showed a distinct negative momentum divergence prior to their respective peaks on Monday, as well as a marked deterioration in Market Internals in all indexes.

Sellers took the S&P 500 under the rising 20 day EMA and short-term trendlines yesterday, breaking under 1,190.

I mentioned reference levels to watch in yesterday’s update, and the levels to watch include the rising 50 EMA (and lower Bollinger Band) at 1,170, then under that the 2010 January high and critical level of 1,150.

NASDAQ:

The NASADQ held above the 20 EMA yesterday and is bouncing off that level – so far (pre-Fed announcement) this morning.

The reference levels to watch include the 20 EMA at 2,470, then the rising 50 EMA and “Round Number” support at 2,400, and finally the January 2010 high at the 2,325 level.

Dow Jones:

Like the S&P 500, the Dow Jones Index broke under its 20 day EMA though it regained it early in Wednesday’s trading session, marking it again as a support zone.

The 20 EMA rests currently at the key 11,000 level (also “round number” support), and under that is the rising 50 EMA at 10,800 and the all-important January high at 10,700.

Of course, if the market reacts favorably to the Fed announcement today, then the current support levels will be irrelevent again and we will be talking about overhead resistance levels, all of which include Monday’s highs in the indexes.

That’s why we’ll keep our focus on what happens after today’s 2:15 EST announcement into today’s close.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

2 Comments

2 Responses to “Quick Daily Fly-by of the US Indexes April 28”

  1. Doug Jones Says:

    Corey, once again they are buying the dip, I figured as much, Market character still the same, Can only short intraday and cover by close, Bulls look like they are going to force those popped stops again. Buyers want in at any cost as you have said.

  2. Corey Rosenbloom, CMT Says:

    That's right! It makes for some very simple, straightforward intraday profits on the long side if you can focus on structure/price and ignore virtually everything else that states we're in an overbought, divergent condition.

    Exactly – “Popped Stops,” “Rally at Any Cost,” “Improbable Rally Continues,” “Creeper Trend,” “Positive Feedback Loop” all those terms are absolutely applicable until the character changes.