Futures Are Higher Before the Open

SPX is breaking to new highs hitting 832 as it continues the current trend up since the March 6 low. Stay with the trend until the end... BMO - ES +10 and NQ +20 future are trading higher with a little more than an hour to go before the cash markets open. If the cash markets open higher, watch if the they break Wednesday's highs for indication that the short term up trend is likely to continue. On the downside the key short term support is still the S1 level of Monday's large white candle. We'll have Great Questions, Great Answers this morning so check back... At the Open on Thursday SPY – hanging man, buyers at 50 DMA MS – hanging man above 200 DMA ESS – doji on 30 DMA GS – hanging man at 200 DMA SNDA – large white candle, +5.29% OSG – bull flag CTSH – bull flag LEAP – bearish engulfing above 200 DMA X – spinning top after reaching $25.08 double bottom price target DLB – bull flag at 200 DMA CRM – hammer, bull flag AMED – double bottom, bullish divergence stochastic

Great Questions, Great Answers (email us at chartsignals@yahoo.com with your technical market questions) Eric asks… Seems like the price action today (Wed March 25) is a cautious one, knee-jerk short covering and then a leg in back to the short market. Also seems like everyone is waiting for tomorrow’s big GDP day. As we come closer to the end of the quarter, what should I expect with this quacky market? If it were totally bearish, I’d expect the fundies to dump some bad performing stocks. And if this now seen as a slightly bullish market, I would expect some end of the quarter buying in some of the good names. In either case I expect some selling to start on Wed of next week. Need some sanity in this insane world…sanity check please. Am I getting close or totally off base? Dave answers… Wednesday’s action I’m sure included both shorting and short covering…however if one really studies the short data that is released every two weeks it should be clear that short activity was likely a small minority of total activity. It is much more likely real cash buyers and sellers created the majority of the buy and sell transactions on Wednesday. Since the DJIA volume increased to 454.1 million shares up from 379.5 million shares on Tuesday, it is clear that not everyone was waiting for Thursday…someone may be, but not everyone. While it is true that the market has been more volatile during the past twelve months than it was during the prior four years due in large measure to the economic and financial challenges in America and the world, this market does not appear quacky to me, but rather it seems is quite similar to past bear market lows in 1974, 1987 and 2002 – 2003. Panic selling seems to have pushed this market to oversold lows and as financial and economic data has been released over the past two and a half weeks, showing that economic estimates had become excessively pessimistic and inaccurate, that cash laden investment firms have been taking advantage of extremely low stock valuations to buy. In 32 years I have never heard a financial professional use the term “fundies” so I’m guessing you mean mutual funds, if so, it seems that they have been “dumping” for 18 months and likely completed the majority of their “dumping” by March 6. While funds are always buying and selling and some “window dressing” always occurs at the end of a calendar quarter, I would expect this to be a minor factor after 18 months of aggressive selling. If by good names you mean stocks that are in up trends, it seems that mutual funds are not waiting for the end of the quarter but actually became aggressive in their buying beginning on March 10. I like your confidence in picking next Wednesday as the day selling will start. From my view I think sellers were in control last Thursday, Friday, Tuesday and part of Wednesday (yesterday), but that on balance buyers have been in control for two and a half weeks. While it would be presumptuous for me to pretend that I can tell you or anyone else, what day sellers will overwhelm buyers and this market will pull back, I do know that when sellers do take control, prices will break support and then fall to a lower support level where buyers will take control back from the sellers. I know what that looks like on a stock chart and I am prepared for that every single day. I hope you and every reader of Chartsignals will be too! Aloha