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Can this morning's gap down lows hold?

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This emotional, Monday morning gap down is at a crucial point. If the selling continues and we see a new low in April (solid red line), we can draw in a new downtrend line (red dashed line).

If this morning's lows hold, the downtrend line would not be drawn yet, and we could have a double bottom situation. The afternoon trading will be key.



As we talked about in today's commentary the Monday after option expiration week in April is historically weak, but the rest of the week tends to do better.

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Intraday Update

Comments

  1. FireWeatherMet's Avatar
    I don't know about anything holding attm. Has nothing to do with the US...its all about Europe, they're in the drivers seat right now.
  2. tsptalk's Avatar
    Hey FWM. Bob Pisani (sp) on CNBC has been saying that traders are reacting to Europe, but there is a decoupling of the Europe / U.S. economic situation going on - meaning these drops caused by Europe are buying opportunities here. Personally, I don't know. Being more of a trader, I am more concerned with the current action and there are some serious lines in the sand being drawn right now. What happens this afternoon and the rest of the week are so important for the intermediate-term action.
  3. FireWeatherMet's Avatar
    Yeah, agree on the US-Euro decoupling. Cramer was right over the past few months pointing this out and those who listened to him made 10-15% since Jan 1. However that news decoupling can quickly get recoupled if Hollande beats Sarkozy May 6th. They promise to reverse austerity and likely not use anymore French $$ to back weak Euro nations. That leaves Merkel as the only Euro backstop and she already has major pressure within Germany to stop doing that. I think what will be priced in over the next 5-10 days is "what happens if France and Germany back out of additional Euro support". Noticed -I- fund already has been breaking down for awhile, its 20-50-200 day EMA's are in shambles on their charts....I is already below its 200 day EMA...and could slide another few percent downward from here. But I agree with you, that our drop likely won't be as bad, nor as long in duration. And hey, with the US dollar gaining bigtime...gas prices here tend to go down bigtime (at least as much as big oil lets them b4 they come up with the infamous "refinery problems"). Price at the pumps going down acts like an instant tax cut...so maybe we will see a Buy in May and Stay (for at least awhile).
  4. James48843's Avatar
    I said back on April 9th we're in for a nice push down to lower levels and a great buying opporunity ahead. I still think we're going to see S fund at 640 or so (within five points either way) and C fund at 1320 before we start climbing again. that's what my gut says, even though overall the market is strong than I thought, and this is going in much more "slow motion" than I thought. I figured back on April 9th that it would only be a matter of days for those numbers to be reached. I see now it's all in slow motion. We may get one more slight upwards cycle this week, but then I still think it is lower ahead and a better oppotunity to buy.

    That's my 2 cents. Your results may vary. Not valid in any state where they have rules. oh yea, and I can't forget this one.... "Except in Nebraska". :-)

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