Market Comment 03/28/07

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TradeStalker's
R.B.I. Trader's Update
3/28/2007
(Published Since 1996)
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Dateline: 6:07 pm Eastern time, 3/28/2007

The market gapped down on Wednesday and then traded sidewaysfor an hour just over the 1432 level on the SP futures. The"cigar" pattern broke to the downside when Bernanke'sopening statement was released. It was an air-pocket drop asthe SP futures fell to 1424.00 in about 20 minutes beforereversing. The first bounce stopped after testing thebreakdown areas and the market pulled back to just over thereversal area and held. Buying came back in and the SPfutures rallied to fill the gap, then pulled back again.After the Intraday Update, the SP futures went through the1432.25-1431.75 and that broke the upside symmetry. Themarket bounced, but failed to make a new high, and themarket rolled over. The sell off stopped at the 1426.75level (updated 1428-1426 cover area), then bounced back tothat 1431.75-1432.25 area with 30 minutes left in stocktrading. That was pivotal most of the day, the SP futuresstopped at 1432.25 and weakened into the close.

The market action late last week and again this week, turnedon a light-bulb. The alert was given on Sunday night andagain last night, that sharp sell-offs were likely. TheSP500 has lost 20 points on a closing basis so far thisweek. There have been several decent rallies, however, thatjust cannot stick. This is corrective action at best, butacting more like bear market action this week.

We get GDP and Initial Claims data before the open onThursday. This is normally a bullish time of the month, butthat upside bias was no sure thing last month! The marketlooks like it will be "okay" as long as the initial supportcan hold. However, it would be better if the initialresistance can be exceeded and held on a pullback.

Look for resistance at the 1432.00-1432.50 area on the SPfutures and the 1798.00-1799.00 area on the Nasdaq futures.If the market gets there and doesn't fizzle out, then thenext resistance is at the 1435.50-1436.50 and 1807.50-1809.00 areas. If those are reached and the market doesn'treverse, then we could go for the 1442.25-1442.75 area onthe SP futures and the 1814.00-1815.00 area on the Nasdaqfutures.

The initial support is at the 1426.75-1426.00 area on the SPfutures and the 1787.50-1787.00 area on the Nasdaq futures.If those are broken, then the 1424.00-1423.50 area on the SPfutures and the 1782.50-1782.00 area on the Nasdaq futureswould be next. If those don't hold, then there should besome support at the 1421.00 level on the SP futures and the1777.50 level on the Nasdaq futures. If those levels arebroken, then it looks like the 1418.50-1417.75 area on theSP futures and the 1773.25-1772.50 area on the Nasdaqfutures would need to hold. If they cannot hold, we could bein another mini melt-down type of move.

Good Trading,

Mike Reed

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