S&P 500
The S&P 500 initially tried to rally during the day on Monday but turned right back around to test the 2080 handle. This is a market that looks as if it is trying to find support below, so I do believe that eventually the buyers will return, but at the same time it is obvious that we are bit overextended. Also, the 2100 level has been an area of significant resistance in the past, and with that being the case, I have to believe that it will probably be so again.
In fact, I think that there is support every 20 points below current levels, perhaps all the way down to the 2000 level. It’s not until we break down below the 2000 level that that I feel that the overall trend will have changed. In the meantime, I have to believe that every time we pull back and form a supportive candle, there will be buyers looking to get involved in this market.
NASDAQ 100
The NASDAQ 100 went back and forth during the course the day on Monday, testing the 4440 handle. That’s an area that has seen quite a bit of support, and as a result it’s not a big surprise that we bounced from there. If we can stay above there, it’s likely that we will eventually try to break out to the upside, but in the meantime the only thing that I see on this chart as potential consolidation, between the aforementioned 4440 handle, and the 4560 level. Eventually, if we can break above the 4560 level, I feel that the market will then go to the 4725 handle, but it is a lot of noise between here and there, so having said that I think that it’s only a matter time before buyers enter this market every time we dipped. However, if we break down below the 4400 handle, I think at that point in time the market would fall apart.
