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Our View

The PitBull has been saying for the last few days that he has seen a lot of tops made in early April. What I see is an S&P that rallied about 6% or 235 points from the March 24 low and is not pulling back.

I want to be clear, I still think all the big pops are just dead-cat bounces and that most of the recent buying was tied to the March quarter-end and the first few days of the new quarter. The headlines have not been very encouraging, nor have the economic reports.

Now we are going into the 1st quarter earnings that can’t be good. According to the Wall Street Journal, “The equity risk premium—the gap between the S&P 500’s earnings yield and that of 10-year Treasurys—sits around 1.59 percentage points, a low not seen since October 2007.”

Our Lean

I would have preferred a straight “sell the rallies” lean without the “buy the pullbacks,” but that hasn’t been the environment. All week, we have been making a low around early afternoon. Also each day this week, the selloff loses momentum and has rallied late in the day.

That all said, the Jewish Passover holiday has started, while Friday is the jobs report and the Catholic holiday Good Friday — with the CME set to close at 9:15 am Friday. Combined with the low volume we’ve seen all week, “thin to win” could be setting up for today.

The ES has pulled back about 73 points from its ~4172 high. The 50% retracement of this dip is up at 4135 and just a bit shy of the March high at 4142.50. The 50% retracement of the recent rally is down at 4076.

Our lean is to continue to sell the rallies and keep an eye on 4135 on the upside and 4072 (and the 10-day) on the downside.

Other levels include 4158 to 4160 on the upside and the 4060 on the downside.

MiM and Daily Recap

The ES traded down to 4117 on Globex and opened Wednesday’s regular session at 4120. After the open, the ES pulled back to the 4118.50 level, then rallied up to 4127.75 and then sold back off to new lows at 4113.25 at 10:10 after the ISM number came out. After rebounding to the 4123 area 10 minutes later, the ES sold off all the way down to 4101.75 at 11:00 bounced slightly, then sold off down to a new low at 4101 at 12:15.

It chopped around this area, made new lows at 4099 at 12:50, then rallied up to 4111.25. The ES dipped, rallied up to 4115.50, dipped again, rallied up to 4118.25 and then sold off back down to 4109.50 at 3:15 as the early imbalance showed $184 million to buy. The ES traded 4116.60 as the 3:50 cash imbalance showed $113 million to buy, traded up to 4119 and traded 4117.25 on the 4:00 cash close. The ES settled at 4114.50, down 14.5 points or -0.35% on the 5:00 futures close.

Gold and silver fell yesterday and bonds rallied while crude oil pulled back but closed firm.

In the end it was another day of constant small sell programs and rotations. In terms of the ES’s overall tone, the weakness in the NQ and tech names dragged everything down with it. In terms of the ES’s overall trade, volume was steady at 1.42 million contracts traded.

Technical Edge —

At the top of this week, we talked about patience and asking for a pullback in the market and that’s exactly what we’ve been getting. The Nasdaq has reset back to the 10-day ema, while the S&P holds in a bit better.

Thursday marks the last session of the week, before we enjoy a three-day weekend.

On that note, thank you for riding with us! It’s been a pleasure being able to write every morning for you and formulate a game plan that we can all be proud of. We don’t “bat a thousand” everyday, but we do our best.

Trade ‘em well, then remember to enjoy the long weekend.

S&P 500 — ES

SPY

I reiterate: I would absolutely love a test of the 10-day, 50-day combo and the 50% retracement. Now though, the 10-day has climbed (trading around $404).

H4 10-ema held firm well. Now we see.

SPX

H4 10-ema held firm well. Now we see.

NQ & QQQ

Both measures tagged the 10-day moving average and the prior breakout spot.

Let’s see if we can get some upside follow-through back into the 13,150+ and $317.50+ area, respectively.

AMD

I don’t want to put too much emphasis into tech here, but the AMD setup is too hard to ignore until the trend fails.

In this case, I’m watching the $87.50 to $89 zone. There we find the 10-week moving average, 161.8% downside extension and a prior breakout zone. Not to mention, we would have a nice ABC correction down to this area.

GE

On watch for daily-up rotation over $95.32 (look for some type of intraday close above this level, like a 15-minute close above this level). Ideal first target is $97+ for ½. $98+ would be the next target.

$93 to $93.50 would be our stop-loss if daily-up triggers.

Open Positions

FSLR, NVDA, QQQ, AAPL, down to runners. Congrats, all. Great sequence!

Go-To Watchlist

Feel free to build your own trades off these relative strength leaders

Relative strength leaders → Tech remains absolutely the strongest group lately.

Economic Calendar

Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!