Morning Commentary for Wed Mar 10, 2010 – Technical Analysis

by Tom Nunamaker on March 10, 2010

It looks like the 1-2-3 high that’s been forming on the SPX weekly chart is still in tact. The key is if SPX can break above 1150 and hold it.

SPX Weekly Chart: 1-2-3 High Still Possible

SPX Weekly Chart: 1-2-3 High Still Possible

If it does, that’s a signal for directional traders to go long. You can bet there are a LOT of people trying to guess the market direction. Anyone with a short position, will have a buy stop above 1150 which will propel prices higher if it goes above 1150. Watch to see if it continues or come back quickly. If it comes back, it could be a false breakout so be careful here!

ES Futures 15 min chart

ES Futures 15 min chart

The ES futures 15 min chart was choppy overnight but essentially unchanged going into the open.

Where are we going from here?

With the market approaching the recent high, you can be sure it’s going to be whippy for a while until the bulls and bears duke it out.

Since volatilities are low, and market direction is uncertain, a straddle or strangle might be interesting.  I’d personally look for one in April as March expiration is too close.

Economic Calendar this week

Nothing significant today. Tomorrow is the International Trade report and Friday is Retail Sales. Those are two “bigger” events.

Given the market is nearing recent highs, caution is advised in either direction. If you’re going to put on a non directional trade, PLEASE put extra long calls and puts on to protect yourself!

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