DAILY MARKET RECAP
Thursday March 31, 2016
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Today’s Price Action
Key Developments :
- Nothing compelling on this last day of the quarter
- Biotech rather strong. Getting them going would really help the bull case.
Intraday it was rather slow. Virtually an inside day and no price action to give us any confidence in taking a long or a short. I personally sat this one out. There were a few moments, where we moved slightly below yesterdays low but no price action to support a trade really. Sure enough it snapped right back above it. You can see a small inverse H&S in the 3pm hour (see chart above), but with qtr and month end profit taking I wasn’t doing anything. I saw no real compelling reason for a move up or down.
Looking ahead, we must continue to expect a move twords the double bottom target of 2084.30. Without even a glimpse of bearish price action, the fact that we have exceeded the October rally on all score sheets (breadth, percentage, and above 161.8 fib where oct failed) why would we not expect to get there at this point. Obviously if we can see the development of bearish price action below it, we will change our tune, but for now, that target is well within reach and no site of failure, at least yet.
If we look at our intraday 15 minute chart, this two day consolidation after Yellen’s speech appears to be forming a bull flag for a move higher. No reason to fight that.
We also notice the VWAP from the event was tested and defended today. Certainly something to keep an eye on going forward.
The Bottom Line:
At this time we see nothing but bullish consolidation with the 2084 target in our sights. See no reason to do anything but trail stops to protect profits and pick your intraday spots if you like. There is currently no evidence of any sort of dramatic pullback, so no reason to make one up. Appears risk on is still in play. Don’t fight the Fed or the trend until it’s time.
A few charts to keep an eye on despite the signs of any significant pullback.
1) XLE – We want to watch this potential reversal pattern closely. In particular the current pennant. The break of that pennant likely gives us this index’s next direction and could have implications for the overall market.
$XLF – We would like to see the Financials participate in this up move along with the broader market. In order to do so we want to see this bullish flag break higher and back above the prior swing high to totally negate the potential bearish pattern. Keep it on your radar.