Was It An April Fool And What Just Happened?

Did you see what the market did on April 1, 2016? No, it was not an April fool. It was a positive close with negative breadth. You might ask what does that mean. Well, if you have been following and/or trading the market for the last couple of weeks, then you have already experienced it; the pullback. Before April 1st, there was a non-confirmed Dow Theory recovery high on March 29, and that was the first message the market sent out to alert us to be cautious. When the positive close with negative breadth occurred on April 1, the market told us to be prepared for pullback. Since April 1, the market had a mild pullback with the SP500 losing 30.79 points or 1.48% on a closing basis and negative for the year, while the DJI lost 236.34 points or 1.3% but remains positive for the year.

And today, the market did the opposite, it closed with a loss but with positive breadth. Under normal market environment, this would have been a sign to prepare to go long. But the market environment is still in a cautionary mode due to the non-confirmed Dow Theory signal generated on March 29. Until the non-confirmation is resolved, one should remain defensive and cautious on initiating new long positions.

Here are the charts with potential near term support and resistance levels for the emini SP500 futures, SPX and SPY.

ES_F (Emini SP500 futures):

Potential near term support near 2011.75 and possible near term resistance levels are 2053.25, 2075 and 2091.50.

(click on the chart to enlarge)



SPX (SP500 cash index):

Potential near term support near 2020.86 and possible near term resistance levels are 2048.70, 2081.56 and 2091.26.




SPY (SP500 ETF):

Potential near term support zone between 202.10 and 202.89, and possible near term resistance levels are 205.77, 207.79 and 209.67.




SPY weekly options open interest for 4/11/2016 projecting a possible pin at 205 and a potential support at 200