Market Comment 02/07/07

There was early strength that reversed from 1455.75 on theSP futures on Wednesday, right in the first resistance zone at 1454.50-1455.50. The market dropped quickly, then after getting to 1452.50 on the SP futures, that first decent pullback caught a bid and the market turned around and rallied back. The SP futures moved on up to make several stabs just over 1457.00 on the SP futures, and was rejected 3 times. One more attempt failed at 1453.75 and after cracking the updated 1456 level, the downside gathered steam. The washout reversed off of a 1451.50 low on the SP futures at 2:55 pm and the market ended the day in uptrends.

We got the range-bound action expected on Wednesday. There was a lot of volatility within a fairly narrow range. As long as the market can keep coming back after being knocked down for only a few hours, nothing bad is going to happen.


Expect some more of the same on Thursday. If there is early strength and the move fizzles in the first 40 minutes of trading, we could get another early selloff like on Wednesday. On the other side of the coin, if the market opens lower, look for a good reversal after the downside momentum dies and the market turns up. At these levels, the rallies that go nearly straight up and then fizzle out asprices "slide to the right", set up shorting opportunities.


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