Let's see where the market can go.
Here is the chart of the $SPX.
Resistance: 847-850. More importantly the down trendline from November is in play and will be a strong resistance level.
Support: 800 level and the 50MA and below. Also the orange trendline.
A break of the orange trendline should start some selling, but 800 should provide some support as well as the 50MA. I highlight the area between the S/L levels as CHOP ZONE. I would expect some choppy trading days in this zone. But as we move through the month of April(of course my April 1-2nd could still be in play) it will be important to watch the November down trendline and 800, these will be important levels. A break above or below these levels could send the market into a new trend.
Taking a look under the hood of the market here are the market internals.
TICK: has been moving down which signals weakness in the market. If the TICK spends time below -1000 it could signal a bottom and that the market is oversold. It's important to look at the MA of these internals.
TRIN- has been climbing signalling that more stocks are declining lately. But above 2.00 could be signalling oversold. But because this market is so overbought I would expect $TRIN to climb higher before signalling oversold.
Stocks above 50MA-One thing to watch is the stocks above the 50MA, since typically the 50MA will provide support. Right now the market has just about as many stocks above their 50MA since Dec 2008. It will important to watch this, a strong dip in this number will indicate that the 50MA are not holding and that their in weakness in the market.
NYMO-is the McClellan Oscillator its the difference between the 19 Day an 39 exponential moving averages of the daily net advance decline figures. It has been chopping around between 50 and 100. A move above 100 is considered overbought, and a move below the zero line is a sell signal. So watching this is key, it provides a shorter-term view of $NYSI.
$NYSI-looks to be stalling, which could signal another reversal of the current trend. A turn down should be shorted, but it could a little rest before the market moves back up again since there is a lot of support beneath the market. If the $NYMO moves down fast, $NYSI should be heading lower as well.
Yesterday I showed some of the market sectors and saw that there is a good chance of a pull back, and that some sectors have support beneath them. Today we see the market is overbought and the internals point to some downside. But there might be support beneath the overall market as well, due to a good amount of stocks above the 50MA. So it will be important to watch the internals for an indication if the market wants to bounce or if the selling pressure is strong enough to push through the support.
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