The rally off of last Monday’s low stalled out Thursday and Friday as the S&P500 only added 2 points to Wednesday’s close by the end of the week. Yes SPX is holding onto its gains from the bounce, but it didn’t do so in a low volatility environment. Friday saw a total daily range in SPX of 19 points, its 4th largest since 2/5. In other words, we’re still below resistance between 1,520-1,530 and volatility is persisting.
I believe you maintain a slightly bearish bias vs 1,525. I choose 1,525 because that is the midway point between 1,500 and 1,550, two very important psychological levels. Above 1,525 and I believe you could see 1,550 start to act as a magnet ahead of March 16th expirations, for reasons I outlined in this post in which I examined where the largest amounts of open interest loom. Technically 1,530 is the level to break as that is the year-to-date high, but I’m of the belief if the market breaks 1,525 it won’t just decide to stop at 1,530.
The S&P500 has been incredibly strong, so while I do like the short scenario vs 1,525ish I’d still prefer to play this by attacking the weakest index, which so far has been technology. QQQ did not achieve consecutive positive daily closes above $67 the entire month of February. Pay attention here, I’m not talking about daily closes above $67 I’m talking about back-to-back GREEN closes above $67. With Friday’s green day close of $67.38, a close of $67.39 or greater is required to show evidence that QQQ’s inconsistency is starting to abate. Tech specific names and levels I’m watching are as follows:
- AMZN below 265-267 is bearish, above it and 270-271 is target with a move above there targeting the all time highs
- GOOG won’t keep bobbing and weaving around $800 forever, it’s getting ready to either see low $780′s or high $800teens very soon, I think this week
- AAPL has significant gap support between $420-$425 from last years post earnings gap up, if $420 breaks then $400 will serve as a magnet
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