Market Comment 04/22/07 - Nightly Update

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TradeStalker's
R.B.I. Trader's Update
4/22/2007
(Published Since 1996)
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Dateline: 6:08 pm eastern time, 4/22/2007

The market gapped up on Friday, right in our 1492.00-1494.00 shorting zone and then headed lower. From a 1492.50 high,the SP futures sold off to the updated support at 1484.50 by early afternoon. The market turned up from there and the labored rebound picked up pace in the last 30 minutes. Off of a 1488.00 pullback low, the SP futures rallied 5 points to 1493.50 in the final minutes of trading.

That last 30 minutes on Friday appeared to be options expiration related. If this move fizzles up here and the SP futures turn down and break through the initial support areas on Monday, it could turn into a top.

The rally on the SP futures from 1375.25 on 3-14 up to 1451.00 on 3-22 and 3-23 was 75.75 points in length. From there, the SP futures fell 33.00 points to 1418.00 on 3-30. If this leg up is exactly equal, then the high would be at 1493.75 on the SP futures. Given a few points leeway (if there isn't much follow through on Monday), if there's a turn from up here, we could be in for a sizeable pullback. A drop of 33 SP points from Friday's high would take the SP back to 1460.50, enough to fill the gap from last Monday before the market tries to get going again. It could happen,but no promises. Something must break this big momentum first.

Look to short early strength on Monday and then if the first pullback can hold initial support, that should set up a buying opportunity. If there is a pullback to the initial support and the market doesn't turn around, then odds of a deeper selloff in the works goes up.

Good Trading,
Mike Reed

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