April 18, 2011
The equity markets are in the process of trying to work higher after finding a short term low last week. However, economic news impacting the U.S. hit the tape this Monday morning and has sent the ESM1 or S & P 500 futures contract headed down to start the week. The futures are testing the lows from April 14 prior to the open of the cash market.
The retest of the April 14 low could be important as a weaker market is likely to take that out and begin a new leg down looking for another short term low. ESM1 traded a low of 1298.25 last week and that is a key area to monitor early this week. HS had a low of 36.75 and the key swing low prior to last week is 35.52. We are maintaining our parameters at this time.
Trading action like this is normal but after a long sprint ahead it makes new long entries difficult because you are not rewarded quickly with gains. Also, being short on longer term positions is not a great play because the trend is still up despite the choppiness. We continue to hold cash and wait for better set ups.
