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Key Algorithm Calculated S&P 500 Support/Resistance Levels: 4540 (LARGE) / 4530 (LARGE) / 4500 (SMALL) / 4480 (MEDIUM) / 4440 (SMALL) / 4420 (SMALL) / 4400 (SMALL) / 4385 (MEDIUM) / 4360 (LARGE) / 4330 (SMALL) / 4225 (LARGE) / 4160 (LARGE)

Assessment: The move on Thursday provided good breadth, volume and broke through downtrend resistance. All great signs for the bulls and perhaps giving the feeling the correction is now over. The question now becomes what sort of sell-off do we get, where does it set a base of support and does it bounce further up?

The bulls would actually have a better picture if they dropped the S&P down to 4370, close the gap, build a base of support and then move higher once again. I would lean to some selling on Friday just because of the size of the move yesterday and the fact that 4440 was holding as resistance.

I am leaning bullish now based on the move. Today is an expiration Friday so it could be a volatile and wild day. Just something to keep in mind when assessing the action. Good luck in your trades!

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Alright, bullish it is! We are now testing the downtrend line off the all-time high. Let’s now see how she handles this. A break here would be good because then any bullish trades could use the downtrend line as the stop loss. Let’s see for the next 1-2 hours if she breaks and holds it or melts away here. Good luck in your trades!

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Key Algorithm Calculated S&P 500 Support/Resistance Levels: 4540 (LARGE) / 4530 (LARGE) / 4500 (SMALL) / 4480 (MEDIUM) / 4440 (SMALL) / 4420 (SMALL) / 4400 (SMALL) / 4385 (MEDIUM) / 4360 (LARGE) / 4330 (SMALL) / 4225 (LARGE) / 4160 (LARGE)

Assessment: Another day stuck in the zone. The edges of the zone appear to be 4330 and 4380. A break of the zone would give good hints to the next direction. Stuck in the zone really doesn’t provide many trading opportunities nor does it give any clue as to next moves. So, I am patiently sitting and waiting to see what happens and what breaks before making my next moves. Let’s see what happens today. Good luck in your trades!

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Despite the inflation data and some issues with earnings, it’s a pretty flat day in the market. We’ll see if there is any excitement later, but looks like it will just be a nothing day. Over the summer I used to reference “DMZs” (Demilitarized Zones) where the market would remain stuck for lengthy periods of time. When the market is stuck in one of these DMZs as I referred them, there really was no trade to make. We are currently in a DMZ right now of 4380 to 4320. It’s a little bigger than those in the summer, but until 4380 breaks or 4320 cracks, there is really no trade…for me at least.

I hate to quote Jim Cramer, but this morning he commented that one day a stock is hot, the next day it is not and nothing goes anywhere. It’s really the case right now. No reason to force any new trades, just riding the existing trades until something cracks. We’ll see where today ends and if it provides any hits for the next move.

Good luck in your trades!

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Key Algorithm Calculated S&P 500 Support/Resistance Levels: 4540 (LARGE) / 4530 (LARGE) / 4500 (SMALL) / 4480 (MEDIUM) / 4440 (SMALL) / 4420 (SMALL) / 4400 (SMALL) / 4385 (MEDIUM) / 4360 (LARGE) / 4330 (SMALL) / 4225 (LARGE) / 4160 (LARGE)

Assessment: Yesterday the 4360 line broke, but then the 4350 line held. Today will be all about the inflation data and earnings. If inflation comes in hot or earnings under perform we could see further selling. There is almost zero bullish momentum. Obviously that could change based on the news today, but you see little pops here and there in the indices, but then it is eventually sold off. The S&P has a healthy downtrend line that is holding. Today that line is near 4400. So, a break of 4400 would show the bulls have the ball. Until then, it’s a bears market and any rallies appear to be good opportunities to sell. Let’s see what the news is today and what it creates in the market. Then we can go from there. I continue to hold my HOOD short position. It is in the money and I really want to see this $40 mark break. I may close it soon if $40 continues to hold. We’ll see…but for now I continue to hold my short position. Good luck in your trades!

By the way…I have system updates today from 8am to 10am ET. If all goes well these could be completed by 9am ET or before, but just in case, be aware this system may be offline for a bit today. If it is then any trade updates will be posted here on the Telegram channel and any urgent messages posted to both Telegram and Twitter. Thanks for your understanding!

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Key Algorithm Calculated S&P 500 Support/Resistance Levels: 4540 (LARGE) / 4530 (LARGE) / 4500 (SMALL) / 4480 (MEDIUM) / 4440 (SMALL) / 4420 (SMALL) / 4400 (SMALL) / 4385 (MEDIUM) / 4360 (LARGE) / 4330 (SMALL) / 4225 (LARGE) / 4160 (LARGE)

Assessment: I said in the FMA yesterday that I would be looking to open new bearish positions on a break of 4360. Coincidentally (or perhaps not), by the end of the day the S&P came to rest at 4361. It is this 4360 level that has been a very key one the past few weeks. We’ll see this morning whether we bounce from here or break under. We could see a bounce early in the day and then I will be looking at how high the bounce goes and thereby how strong the move. If a weak attempt that is stopped at 4380 and turns back, I may look to limp into a bearish position at that time. If we burst through this morning, I will likely look to open a new position or two.

The key for bulls and bears though is the 4280 level. A break there would confirm a new leg down. That’s a roughly 2% move from here. A break of 4280 and I would see a very high probability that we are headed to 4200. Then bulls may find support and mount an actual run from there.

So, plan is easy today…how do the bulls/bears handle the open at 4361…if they push higher, how high and strong is the move. Does it fizzle out at 4380 or burst through. A break of 4400 says the bulls have the ball. A break of the 4400 level and I will be looking to bullish positions.

Overriding all of this is a very strong interest in commodity based stocks due to inflation. Oil is taking off for no other reason than inflation. I think soon this will be the big and only story for this market. It’ll be inflation, what the Fed has to do to protect against it and how it could be resulting in stagflation which is very bad for corporate markets…and thereby corporate valuation…and thereby stock prices. That’s the longer term picture I am seeing and the risks out there to being bullish right now. First things first though…let’s see what she does with 4360. Good luck in your trades!

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Key Algorithm Calculated S&P 500 Support/Resistance Levels: 4540 (LARGE) / 4530 (LARGE) / 4500 (SMALL) / 4480 (MEDIUM) / 4440 (SMALL) / 4420 (SMALL) / 4400 (SMALL) / 4385 (MEDIUM) / 4360 (LARGE) / 4330 (SMALL) / 4225 (LARGE) / 4160 (LARGE)

Assessment: Market sold off a little on Friday. It was nothing exciting, but definitely showed that resistance is holding for now. I don’t have much to go by today. So, I won’t waste your time with a lot of fluff and no substance. I basically want to see what we do for the first few hours on Monday. It really is my strategy every Monday because it often dictates the week ahead. Does the volume return after two quiet days Thursday and Friday? Do we move up or down? How does she handle support and resistance regardless of the direction we go. Once I get some answers to these questions, then with the information from the algorithm I can start to put together a strategy. Let’s see what happens and reconvene here around the lunch hour. Good luck in your trades!

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Key Algorithm Calculated S&P 500 Support/Resistance Levels: 4540 (LARGE) / 4530 (LARGE) / 4500 (SMALL) / 4480 (MEDIUM) / 4440 (SMALL) / 4420 (SMALL) / 4400 (SMALL) / 4385 (MEDIUM) / 4360 (LARGE) / 4330 (SMALL) / 4225 (LARGE) / 4160 (LARGE)

Assessment: It was a good move up yesterday, but of course nothing is ever perfect in the stock market. The problem with the move yesterday was volume was very low. It’s almost if the bears didn’t care about the result and were waiting for something. The jobs report perhaps?? Well, the jobs report came out and after initial volatility the markets are curiously flat, although the NASDAQ is up a little more than the others. The NASDAQ loves free money and a weak jobs report perhaps means delayed taper by the Fed. I am not sure what to expect at the cash open. Things can always change once live trading hits. However, today’s jobs report should show you that logic and reason often go out the window. Basically nobody is going back to work and the market celebrates it. Anyone with a brain would say that is not a good thing. However, the stock market cares about free money and low interest rates and a bad economy will provide those things. It’s why I always tell people the market operates irrationally to news and predictions more often than it operates rationally. It’s an important lesson because there are people who bet on a bad jobs report and how that would be bad for the market. Sounds like a pretty straight forward idea and proper bet given the person’s assumptions…but then it’s all out the window. Sometimes it is almost better to say that the worse the news, in this current market environment, the better the market response. It’s very odd. I had one position which I will be closing today which was to take a shot on XLF benefiting one way or another from the jobs report. Like the indices it is flat right now so, it’ll be a flat return and I will be closing today. FMA members stay tuned for the alert. I would like to see the cash open. Then I will probably wait a few hours this morning to let things shake out and see where we are at that point. Looks like the bulls will have the ball though.

Good luck in your trades!