I stated yesterday that "there seems to be decent support at the 1438-1440 area and strong resistance above at the 1450 level. I expect to see some chop in this range. Expiration week is next week which typically is flat to slightly bullish so we could see a retest of the 1450 area although I expect to see another failure at this level."
Today the market opened lower and pushed down to 1434 where it immediately found support and bounced hard. So hard that it practically recovered the entire loss from yesterday. When I stated that we could see the 1450 area again I wasn't expecting it to occur in one day. Could today's action just be a dead cat bounce or will the market continue to push higher and retest the recent highs around 1460?
The open will most likely be influenced by the PPI report due out tomorrow. A positive inflation report will most likely cause an upside gap in the indices which are typically faded especially when the indice gapping is in an overbought state. Tomorrow could prove to be very interesting.
Overbought/Oversold levels for April 12, 2007
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SPY - 72.3 (overbought)
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DIA - 64.4 (neutral)
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IWM - 66.7 (neutral)
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QQQQ - 63.0 (neutral)
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GLD - 67.5 (overbought)
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OIH - 78.2 (overbought)
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Have a great night!
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com