Futures Watch – Thursday March 26, 2009 – Futures Are UP

The market was had an interesting day yesterday –up big, then down – falling through the S&P 800 level (who knew that 792 would turn out to be such a nice support area?) – and then coming back at the end to finish at 814. The fact that support was found and prices rose at the end should be considered bullish.

Yesterday I had written about maybe dropping the long ETF if 800 failed, but to wait until the 780 failed as support before actually switching over to an inverse ETF – and the way things played out, that was way to play – the uptrend was in danger and it would have been prudent to bail – but nothing ever said that a new downtrend had actually begun – and it hadn’t. So anyone who switched too early lost money. It’s a good idea to wait for confirmation on trend change – either the failure of the next lower level of support (which will tell us that things really are headed south) or for the price to go below the last lowest 3-day bar level – which yesterday was at 766. Yesterday, if you had just gotten out and waiting to make the switch, rather than switching automatically, today would just be a matter of getting back into the long ETF no fuss no muss without taking any losses.

Futures rose overnight into the 820s and have consistently stayed above yesterday’s close. I keep pointing out the the way forward into the 800s is filled with lots of resistance areas – but I also feel that this uptrend should proceed at least until the earnings season starts the week of April 7.

Going forward, I expect more days like yesterday – lots of volatility and slow progress upward.

Keep an eye on the 800 area again for support – bail if it fails again, but wait until a failure of 780 to make the switch to the inverse. The 3 day low has now moved up to 772.

Here's an interesting feature on the daily chart: remember I've been talking a bit lately about a trend line going back to last September that we finally breached with the big day on Monday - check out yesterday's price bar on the chart - and notice where yesterday's support was - the trend line! This is incredibly bullish - this line acted as very strong price resistance ever since the tumble beginning last September - and now suddenly it's acting as support. I bet the bulls just wish it was an upward sloping line - LOL

S&P 500 Daily Chart - 3 Months





To be fair, the trend line at this point also corresponds to the 50 day moving average (ma) - so it's entirely possible that price was reacting to the 50ma rather than the trend line - but the important thing is that the turn-around yesterday wasn't completely at random, but based entirely on finding a logical and usable support - that is bullish going forward.