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S&P Pursued by Bulls

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But will we see a lower close at expiration?

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Editor's Note: This is a free edition of Jeff Cooper's Daily Market Report. To receive a 14-day FREE Trial of Jeff's insights twice daily, click here.

She's got a ticket to ride
And she don't care.

-Ticket To Ride (The Beatles)

The S&P bottomed on March 6 at 667. March 6 is 90 degrees, or "squares" the price of 667. 803 vibrates directly off March 6 (it's also a conjunct March 6).

In other words, the date of the significant low resonates on the price of 803 S&P. That time and price square out is a place to look for the first meaningful pullback.


Click to enlarge


However, with today being option expiration and the official start of spring, the indices may hold up until the weekend. The expiration should be controlled by the option expiration arbs, with the basket programs carving out either a 77.50 Spyder close or an 80 Spyder close.

I would trade most stocks on their own dynamics, with an eye to where they might be "pinned," as the basket programs will hold the indices hostage. This agenda was set up by profit-taking in the financials yesterday, while strength in the GLOBEX in energy before the open set the hook there, with the oil names picking up the slack.

As long as the S&P remains above 780, there remains a chance for a move back to 800 and the weekly close above the 50-dma. The bulls would like to score. Under 780 suggests a lower close for expiration.

If the index manages to claw its way back up -- offsetting the double Cup & Handle pattern on the 10-minute chart of the S&P shown in last night's report and repeated here -- then the index may put in a pivot high for the week - i.e. a high (yesterday) surrounded by 2 lower daily highs.



Either way, the cycles point to the first 2- to 3-day reaction beginning on Monday at the latest - an option expiration hangover. The important thing to consider is that the buyers of the financials over the past 2 weeks will probably be sellers early next week, while the energy names will be buys on dips.
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No positions in stocks mentioned.

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