Watching Key Levels This Morning

Posted on Mar 30 2015 - 9:35am by Sharpe Trade

It has always struck us as somewhat humorous that new traders will draw support or resistance as a line on a chart, with the belief that XXX.X5(2) will be the one true exact point where resistance or support for a market lay.   The …(2) … that’s the ‘line’ in the sand right there.  As if the … (2) makes all the difference.

We had remained bearish on equity prices throughout last week, while watching 30 Year Bond futures to see if the 30 Year would continue it’s rally.  While 163’20 was breached on the June contract, a simple one hour chart demonstrates that it was never ‘convincingly breached’.  We do not draw ‘lines of resistance’ as if they were magical points on which the market will turn based on the placement of a decimal point.  Rather, we watch for regions of support and resistance.

For now, we remain bearish equities, however, a directional switch in bias could be forming. We continue to watch the 30 year at these current levels of between 164’17 and 163’20.  The 10 year has already been showing some weakness.

The first sign to us that the stock market may be truly begin a new rally, would be a daily close above 2070.75 on the June e-mini S&P 500 contract.  But again, rather than watching one firm ‘line’ and price level, I’d would like to see a daily close above those levels, and bond futures start to fall on the longer end of the curve …

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