Market Oozes in to the Weekend

Pre-market futures are flat to up slightly as the Bulls try to build on the Hammer from yesterday. The Dow was headed for 7,500 when the government threw a news bogey at the markets in the last hour yesterday, which traders bought in to and sent the market back up in a Hammer. The net result is that the market has a higher probability of heading back up today - or in the next couple of trading days.

Here is a chart of the SPX showing the Hammer:
(click on image to enlarge)

Here is a chart of the SPY showing a Rectangle pattern forming:
(click on image to enlarge)

You can see the SPY (as a proxy for the market) is looking like it wants to go up and tap the 87 - 88 area again. A drop below the 81 area (or a little lower) means the bounce has failed and the market is probably headed lower.

If the SPX (and the market) have a stronger move this morning, or throughout the day, it will still probably at least pause (or not make it past) the 845 - 852 zone today.

As far as the news bogey goes, remember, it doesn't matter what logic and reason tells you about the substance or effectiveness of the announcement, it only matters how Big Money is reacting to the announcement. I've talked about the desperation on the part of the Fund managers the past 4 months, and it was never more evident than yesterday. So ignore common sense and go with the technical move, which is up right now. Remember your trigger points for a technical failure, and as long as the market builds off the Hammer, look for an upswing to short-term resistance. Because this is a three-day weekend coming up, don't be surprised if the market goes flat in the afternoon as traders ooze their way into the weekend.

12:00 pm MT: Intra-day Update: A Reverse Head and Shoulders is forming on the 60m charts of the SPX (market). The troughline or resistance breakout area is 837.50 - 840, so a clean break of 840 opens the door for a continuation of the upswing (on the daily charts) to 850. We might not get it today, but the Bulls are still trying to build off the Hammer from yesterday. It's about now that I expected traders to kind of ooze their way off in to the weekend.

Here is the 60m chart of the SPX:
(click on image to enlarge)

We'll see if the Bulls stick around for the fight, or if everyone takes their ball and goes home.....

P.S. The Ten-year Yield is actually up today, and mortgage rates are unchanged from yesterday, so the bond trades don't seem to be quite as giddy about the "announcement" as the stock traders. Usually selling bonds is a signal that traders may be buying stocks, but the two markets have gone their separate ways the past 4 weeks.

2:00 pm MT: Market Wrap: Ooze.....how's that for a wrap?