Thursday's Rise to Resistance (QQQQ, SPY)

by: Tate Dwinnell June 16, 2006 | about stocks: QQQQ / SPY    

Tate Dwinnell

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On a day like Thursday it's very easy to see all that green and want to jump in with both feet and forget about where we are coming from. Granted, if you're swing or day trading, the move created opportunity. But for those not interested in the short term thrills this market has been offering recently, it's important to keep the bigger picture in mind.

Despite today's thrilling move to the upside (or so it seemed thrilling to CNBC), the market is still seeking a bottom and today's move only gets us to first levels of resistance. Nothing more than that for now. Let's not get too excited yet longs... there is much work to do.

There is room to run yet before that resistance level is met, so we'll probably get some more green tomorrow at the open. With options expiration it should be an interesting day. That was a big time move today, but where is the volume to accompany it? Sure it was higher than yesterday, but not well above average. Institutions aren't yet putting money to work, but the picture for longs is continuing to improve:

Same story with the S&P. Some room to run before resistance comes into play. There is probably enough momentum from oversold conditions to clear that first level of resistance at the 200 day moving average around 1260 and touch the downward trend line at 1270. I'll be looking for a couple short term short plays there should it happen:

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This article has 3 comments:

  •  
    Jun 16 07:35 AM
    If you make that 1265 and 1278 then we are in agreement but only for very short term.

    Disclosure: This comment was written by a CrossProfit analyst. This is a personal opinion and may not reflect the opinion of CrossProfit.com.
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  •  
    Jun 24 09:13 PM
    A guess is a guess. Most of the original author's comments are rehashing of old cliches as" the market needs to do more work before it moves up" or "there is more room to run." These cliches can be applied at any time as the market is always dynamic. I have been guilty of like cliches but believe something more substantive is needed here. If I had the answers I would be one of Seeking Alpha's writers which I am not. So if nothing better one can just admit it is a " gut feeling." Well at least the alignment of the solar bodies is not claimed to be needed before we start a substantial move up. Peace.
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  •  
    Jul 13 10:20 PM
    Ok, you got me, there may be some cliches in there. I'll try for a less mundane, more entertaining approach next time... maybe.

    I get the impression you're not a believer in technical analysis. That's fine, but technical analysis proves to be a valuable tool (at least for me) in taking analysis from pure "guessing" as you imply to an educated guess. Of course nobody knows where the market is going, but I can guage the probablity of a move in some direction with a look at support/resistance & price/volume movements. The charts above were indicating a much higher probablity of further deterioration over the following weeks then of a sustained breakout. As it turned out, the markets cleared that first level of resistance, but ulimately failed at the next level around the 50 day moving average. Thx for your comment
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