Monday, April 19, 2010

Fallout from the SEC/Goldman Sachs situation is pressuring U.S. equity markets overnight. Last week’s closing price reversal top in the June E-mini S&P 500 has been
confirmed which sets up two scenarios. The first scenario calling for a daily chart break to 1190.75 has already happened. The second scenario calls for a break to 1178.75.

This appears to be developing into the worst threat to the bull market since it began in March 2009. Going into Friday’s action, this “mature” bull market has been
struggling despite better than expected earnings and an improving economy. Long traders have been coming in everyday looking for a reason to sell and may have gotten it on Friday. This often happens
in bull markets because long traders look at the size of the rally and wonder how the market is going to sustain itself if the buying stops because of lofty price levels.

Traders should watch to see what happens in the June E-mini S&P 500 following a test of 1171.00. A breakout through this level will …