Last week we had a nice possible “capitulation day” for the S&P; with this week bringing the first signs of recovery. Therefore, let’s look at the chart below to see if the Market is gaining strength.

1. The Market has taken my latest Trading Point 1074.50 on Friday. Again there are no Trading Points to the downside.
2. The “floor” or support now appears to be 1006.00 which we will watch for signs of confirmation and it looks like we are starting to get signs of confirmation.
3. RSI (Relative Strength Indicator) actually is divergent to the price action suggesting that this could be a good area of support. We are getting more proof of a confirmation.
4. Now the other side of me wants to waive a caution flag - the Market hit my “magic” number on the RSI again and this is area where Professionals like to short the Market. We want the Market to stay above this number.
5. Volume is weak on this up-move. Again another sign of caution.
6. We will be starting Earnings Season again on Monday and all indications suggest that this could be an excellent quarter for companies.
7. The S&P may head all the way up to 1081.00 and then watch for a retracement.

Here are my Trading Levels (same as last week):

1127.75
1098.75
1081.00 (Important Level) Should make it to this Trading Level before retracing.
1066.50 (Important Level) Closed on Thursday at this Trading Level
1052.25 (Important Level) Opened on Thursday at this Trading Level
1034.25
1006.00 (Support)

And here are my updated Trading Points:

1198.50
1156.25
1109.75
1074.50 HIT

Click on image to enlarge!

Have a Profitable Day Trading!

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