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TradeStalker's
R.B.I. Trader's Update
1/8/2007
(Published Since 1996)
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Dateline: 6:31 pm Eastern time, 1/8/2007

The futures opened just under the 1419.75-1420.50 area onthe SP futures and the 1803.50-1805.50 area on the Nasdaqfutures on Monday and quickly dropped to 1414.75 and1795.50, respectively. The market turned and popped back to1419.50 on the SP futures and 1808.00 on the Nasdaq futuresand the market reversed again. The selloff took prices tonew lows at 1413.00 and 1792.25 and then the market got somefooting for another rebound. The move fizzled again at1419.00 on the SP futures and the market pulled back untilaround 1 pm.

After refusing to break 1415.50 on 2 tries, the marketcaught a bid and drove prices through the 1419.75-1420.50resistance zone. That cleared the way for a run-up to the1423.25-1424.00 zone and it acted as a magnet. However,after reaching a 1423.50 high, the SP futures pulled backright to the 1420.50-1419.75 breakout zone. The move held at1420.25 and then more buying came in and moved prices to newhighs in the last hour of trading.

The market did well by holding the 1420.25-1419.50 area onthe SP futures, after that had been a lid overhead for thebetter part of two trading days. The rally wasn't all thatimpressive, but we are coming off of some oversoldindicators and the sentiment was getting overly bearish. So,the bulls will need to hold that area on a pullback onTuesday. If that area isn't bought, then the intraday trendswill roll over and there will likely be an attempt to testsupport zones at lower levels.

The day ended with uptrends, though the market sagged at theend of the day. I'll come into Tuesday looking for two-sidedaction. If there is early strength, look for the move tofizzle in the first 20-40 minutes or so for a shortingopportunity. Thereafter, the first decent pullback shouldset up a buying opportunity IF the market can hold theinitial support areas. If those initial support areas arebroken and the market cannot quickly reverse, then a littletop may be in place from Monday's action.

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Good Trading,
Mike Reed