Market Comment 03/21/07

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TradeStalker's
R.B.I. Trader's Update
3/21/2007
(Published Since 1996)
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Dateline: 7:06 pm Eastern time, 3/21/2007

After a flat open on Wednesday, there was a quick pop that reversed and the market sold off to 1421.00 on the SP futures. That corresponded with the 60ema on the 5 minute chart, and there was a bounce from there back to test the morning highs before the Fed release. After the release there was a quick up and back down, and then the upside took hold and the buying "fed" upon itself until making a reversal bar at 3pm. Off of a 1449.75 high, the SP futures pulled back 8.25 points to 1441.50 and then the market reversed and rallied into the close.

We get the Leading Indicators at 10am on Thursday. At Wednesday's close, the daily internal indicators were stretched to overbought extremes. The RBI Sell gate is open,and the 3 day Thrust is at +.87(+.50 normal overbought). The 4 day volume ratio closed at .70, also very stretched. Along with that, the sentiment has gotten a bit too euphoric. The VIX closed at 12.19, and is more than 10% below its 10 day average close. The futures settled well under "fair value"showing that traders aren't real comfortable being long overnight at these prices.

That said, this move has good momentum so prices would need to reverse before being too aggressive on the short side. If there is an early pop higher, and it reverses, it sets up a great shorting opportunity. If there is early weakness,buyers will need to step to the plate at the initial support areas. If they don't hold, then we could get rolling on the downside.

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