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S & P - Deja Vu, Still?! Maybe A Qualitative Difference.

Mar. 13, 2011 9:57 PM ET
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Seeking Alpha Analyst Since 2009

Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he managed money in the cash bond market for a $5 billion pension fund using Peter Steidlmeyer’s Market Profile. Proficient in Gann, Elliott Wave, Market Profile, etc, Mr Noonan no longer uses any of those technical procedures. Instead, his primary focus is on developing market activity, relying solely on the information generated by the market itself, such as the interaction between price and volume, and how they relate to important price levels in the market structure. He incorporates proven market principles, such as knowledge of the trend, supply and demand, along with disciplined rules for to find developing high probability trade opportunities. He can be reached by e-mail at his website: mn@edgetraderplus.com

Sunday Evening  13 March 2011

 Seems like the S & P is having a rerun.  After what appeared to
be some possible topping activity, while still allowing for one more
new high, [See S & P - Almost Fork Ready, click on
http://bit.ly/eSukFt, first paragraph], the weakness apparent has
turned around, or so it seems.  It has a familiar look about it.


S&P D 13 Mar 11

 Yes, the S&P made a similar reversal at the end of January.  Can
the S&P turn around and find another new life for a higher high. 
Anything is possible, and while we were close to calling this fork
ready, as in done, like every situation, there needs to be
confirmation.  There was no confirmation to Thursday's downside,
and now we must wait and see if there will be confirmation for
more upside.  This is why we always say HOW a market
tests/retests support/resistance areas is so important.  It shows
the market's intent. 

 S&P D2 13 Mar 11

 This time around, there could be a qualitative difference between
the two reversal days.  At the end of January, price was still in an
up channel, and corrections lasted 1 or 2 days.  Now in March,
price has fallen downside and out of the support channel.  Plus,
the number of days correcting from the last swing high was 5 days,
just on the cusp of a first degree correction.  However, last
Thursday created a lower swing low after a lower swing high. This
turns the daily trend from up to sideways, so the quality of the
market has changed since the January reversal day.

[See S& P - Deja Vu All Over Again, click on http://bit.ly/fZsVbE,
original chart]

 Now, we need to see a close above last week's high to allow for
one more stab at new contract highs.  Alternatively, a close under
the support line, around 1288, would say price will resume in a
lower price direction. 

 There is no reason to be a seller at the lower level, as Friday's
turnaround demonstrated, nor is there much reason to be a
buyer, given that the trend has gone neutral and makes the long
side vulnerable.  A rally back into the trading range, followed by
a weak correction would make more sense for an approach from
a buyers perspective.

S&P D3 13 Mar 11

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