After a turbulent after hours trading, S&P futures plummeted more than 40 points(1446,50-1393), only to find balance just above 1420. The low liquidity in the after hours trading was another reason that affect the size of the decline. A revisit of the lows (1393) during regular trading hours would be a sign of further weakness. Cash prices have the upward sloping trend channel supporting the index now at around 1420 level. If prices trade below that level for more than an hour, then 1400 is expected to be tested. If the decline has not triggered your stop, its time to be extra carefull and not a stubborn bull. 1420 is a very important support level. The next level of support is 1410. If it is broken, then the sequence of higher highs and higher lows will have ended. Short term trend remains down taking into consideration the futures activity. A move past yesterday’s high will re-energize the rise towards 1460 combined with the long candlestick tail in the after hours futures trading. I put more weight on what happens in the cash market, but still take into serious consideration what happened in the futures market.
If 1420 holds, the market is expected to start a new upward move from these levels.
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