S&P 500 - April 21, 2009

some charts courtesy of stockcharts.com

Bounce off short term oversold conditions.

We thought a bounce would come, and market agreed with us.

Yesterday, I said

Index rushed down to a prior peak point, which coincides with the lower boundary of a rising channel (drawn in thick Red) and stopped there. A logical spot to lighten short exposure if one is concerned.

Index rallied smartly to the 848 pivot and 850 area of support/resistance that we have been talking about. Nothing has happened yet to force me to change my count. around the close, I put a portion of shorts that I had covered yesterday.

This is a 5-minute chart of June futures



Notice that the second part of the rally, from 2 PM or so, looks quite choppy, and corrective in nature. That gave me some confidence to add some shorts back on. I don’t know how far this will go, or how long it will take.

This is the 60-minute chart of the index that I have been using as a road map.

It is not uncommon for the price to get back to the underside of a broken wedge, or even get back inside the wedge briefly – something to watch for.

This is the somewhat different chart of the June contract

For the day, volume was above average but less than yesterday. Breadth was positive but much more subdued than yesterday.

Today’s buying was not enough to turn the Stochastics up – just an observation

Price is in support/resistance area of 850, after that we have 912 pivot. Next support levels come around 825 (an area of previous tight actions), 815 (top of a gap down on March 30), and 789

Short term trend is down. Mid-term trend is up. Long term trend is down.

Food For Thought: My data provider shows the June contract at 4-5 points discount compared to cash index. Backwardation on S&P 500? In fact, that was true of Nas100 and the DOW as well. What does that mean?