Stock Indexes Bounce to Our Sell Levels – Time to Go Short

1. Emini S&P March futures collapsed quickly, all the way back towards Thursday’s low and strong support at 5060/55, with a low for the day 3 points above on Tuesday. Yesterday we shot higher to strong resistance at 5115/25, with a high for the day at 5134.50, keeping you in the shorts (if you tried this trade).

2. Nasdaq March futures longs at first support at 18000/17900 worked perfectly on the bounce from 17,832 to the target 18130/170 area, with a high for the day here in fact, exactly as predicted.

3. Emini Dow Jones March futures recovered from Tuesday’s downside target of 38550/500,

: unexpectedly collapsed almost as far as strong support at 5060/55, without warning, although we are severely overbought of course. Longs need stops below 5045.

• Strong support at 5060/55 is so important that a break lower today could even be seen as a short-term sell signal (despite the very strong longer-term bull trend) and we could fall as far as 5010/00 for profit taking on any shorts.
• A bounce from 5005/4995 would be expected but longs need stops below 4985.
• I wonder if we will build a short-term head & shoulders pattern. I am watching carefully. Yesterday’s high at 5134.50 and reversal to 5100 as I write increases the chances of this forming, as stated yesterday.
• Strong resistance again at 5115/25 but shorts need stops above 5135.

March futures longs at first support at 18000/17900 worked on the bounce to 18130/170, with a high for the day as predicted.

• If you try a short at 18130/170, stop above 18220.
• A break higher should be a buy signal for today targeting 18260, perhaps as far as 18310.
• THE BEST SUPPORT FOR THIS WEEK SHOULD BE AT 17760/730. As long as this holds, the bulls remain fully in control. Longs need stops below 17630.
• A break lower should see 17730/760 act as resistance targeting 17550/520 and even as far as 17400/350 for profit taking on shorts.

Emini March shot higher to from 38550/500 to hit the target and resistance at 38780/820. Shorts needed stops above 38880, which was tricky as we reversed from just 20 ticks above here at 38900.
If you held on to the short position, we immediately collapsed to 38600, offering up to 200 ticks profit on the day.

• I would not trust 38550/500 as support today. I fear this will not hold.
• A break below 38450 signals further losses with 38100 a realistic target.
• I cannot rule out an eventual move as far as strong support at 37750/650.
• I would even try a short again at 38780/820 with stop above 38900 this time!! (I very rarely suggest trading against the major trend).

If we continue higher we could meet strong resistance at 38950/39000. Only above here puts bulls back in full control.