Yesterday the markets had a good rally back up and into the middle of the trading range that formed from mid-February to mid-March. The gap areas that had remained from the March 10th drop were filled. Overall, the market is showing strength. Sellers had the opportunity to take the market lower two days ago (March 23) but couldn’t.
Nevertheless, we may be in for a setback over the next day or two. The Russell 2000 index has been the relative strength leader over the past few weeks. We saw it make a shallower low, and then rally aggressively back up above its swing low of February 23-24. But now, our index leader is showing some signs of potential exhaustion (most likely temporary). While the S&Ps had a strong rally yesterday, the Russell is showing signs of shortening of the thrust. As the other indices made new intraday highs late yesterday afternoon, the Russell did not.
Any reaction down should find support first around the 1300 level, and then the 1296 to 1294 level. This was an area where we had a lot of trading two days ago.
Should the market decide it wants to continue higher, the next levels of resistance would be found at last night’s Globex highs of 1314, then the 1320 and then 1327 levels.
I’ll be a guest in the VSA Club with Gavin Holmes later this afternoon, so we can talk about how the market traded over the morning and early afternoon sessions.
Our Chart Reading Mastery is near getting full. We have a handful or so of slots left (we have to limit the membership because I do individuals’ chart reviews and comments, so there is a fair amount of work on my side). If you have been thinking about it, you might want to consider securing your spot. See the post just below this for more details. And, you can get in here: Chart Reading Mastery
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