Market Tips to the Bulls

The market paused yesterday to catch its breath after such a large move the day before. Today, the market is in stasis, wondering which way things will tip. The economic data this morning was mixed, with Weekly Jobless Claims coming in slightly worse than expected, and Retail Sales coming in slightly better than expected. Because the data came in near enough to expectations, pre-market futures are relatively flat.

The market could tip either way today. Since the range yesterday was fairly narrow, a move outside the range would create a probability for the next move.

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

Here is a chart of the Naz:
(click on image to enlarge)

The index charts look very similar, so I will focus on the SPX. If the SPX drops through 713 then it's probably headed towards 700, with the probability increasing for a return move back to the 670-680 "Fibonacci" zone. If the SPX pops through 732 then it's probably headed towards 750, with the probability increasing for an intermediate term change in the downtrend from bearish to neutral to bullish. If the market pops or drops through yesterday's range and then collapses back into the range after a head fake, then the probability increases that the market will continue to pause, which would actually be more bullish and increase the likelihood of a move up to 750.

Pre-market futures continue to battle around the flat line, so the market may "kick the tires" for awhile before deciding what to do next. Today is really a 50/50 type of day to me, it could go either way. And today has a slightly larger risk of a headfake pop or drop, so a failed signal could be a good signal too. I would be more inclined to play an individual stock move today than the market ETF's. And I would watch things closely and stay nimble. If the market picks up some momentum, then it could run a fourth leg up on the intra-day trend, which would take the SPX to the 745 - 750 area. However, I want to stay right on top of the price action for a while today, it may take a little while to see which way traders want to take things. If nothing forms by mid day, then the market may stay in pause mode for another day.

11:55 am MT: Intra-day Update: The market tipped to the Bulls a few hours ago and now the price action is on its fourth intra-day leg on the 30m charts. Right in this area (740 and up to 750) is the zone you want to start scaling out a little from any calls you placed a within the last 90 minutes or so. This leg on the 30m - 60m charts looks like it will peak out right in the zone I drew for you pre-market.

Here is a 60m chart of the SPX showing the current intra-day upswing:
(click on image to enlarge)

Here is a 30m chart of the SPX showing the fourth leg intra-day upswing. You can see the trajectory and price action is starting to slow:
(click on image to enlarge)

A drop below 730 would be a drop dead for any remaining calls. A run to 750 would probably be the last area to squeeze out any profits on the day.

1:00 pm MT: Intra-day Update: The SPX (market) ran right to about 748 and is starting to consolidate a little. This is getting in to the last area I would expect before the current leg up is done. So this is a good lock and walk spot for the day on any remaining calls.