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Market Comments for April 2, 2015

 

Yesterday the market opened flat but immediately continued its slide from the prior day. It fell hard for the first 30 minutes and set the low of the day at the 10.00 reversal time at “2”. The market had a small bounce and stayed sideways for the rest of the day in a very narrow pattern. It closed in the top the consolidation leaving a red bar with a small bottoming tail on the daily chart sitting very close to the support area at “3”. The SPY was the same.

Today prices will have support at “2”, and resistance at “1”. If prices gap or trade briskly above “1” that area will become the support area with a void existing up to yesterday’s high. How well this works largely depends on the strength of the support at “3”. There are two conflicting concepts. On one hand the area at “3” was originally a minor support area and now has become a major support area. This will not be easy for prices to break. If “broken” in the morning prices will likely snap back fairly quickly. However the lower high and daily chart set three days ago is concerning. The longer prices remain weak and consolidate in the area near “3” the more likely a downtrend will come. Until that happens however the support is still valid and it should be assumed that prices will hold support in a well established area until they decide to change that pattern.