SPX 3-22-12

Lackluster news out of China and Europe overnight but, another decent jobs report out of the US has us sitting slightly red at around 8:45am eastern.

All I have to say is that the bears cannot fail here. Everything has aligned --- gap through 1400 support, metals/energy/AAPL down, DX up, even RSI/MACD look more overbought than oversold which is very atypical for mornings of late.

The gap MUST hold.

Based on triangle formed with the last three trading days:

Bearish target: 1390 SPX

Bullish target (if gap should fail): 1420 SPX

Chart at the moment (looks like a little bear flag but will we get some selling to break down?):

SPX 3-13-12

Guess what? Another gap up! Really? Yes! When was the last time we had a gap down? I can't remember and they probably BTFD anyway so the point is moot.

Sorry for my awful humor, just a bit bitter this morning as the market rallied all night long. Do traders really think that the Fed will institute more easing with the market already at the highest level since 2008? Seriously, why must we view the 2007 highs as a target that must be met? Can't we be happy with what we have? Mind you, there are many solid companies out there now, ones who took advantage of the "recession" to get leaner and meaner and used free money to get more efficient. But apparently, we must see 1500 (or maybe 2000) before the hungry hungry hippos will stop buying.

Enough of my rant. As we stand right now, we should open at the 1378 high from 2/29. That said, RSI appears to be diverging, MACD appears to want to cross (both 5 minute ES), and VIX will likely gap down through its' Bollinger. Oh yeah? And the DX is camping out above $80. I don't think this gap up can hold, but it wouldn't surprise me if this was just the beginning of a mega short squeeze.............

ES daily chart 10/20/2011

It is make or break time, we have 200 EMA acting as resistance while 20 is looking to crossover 50.  Market is moving one way or the other.  I would be playing a breakout lower, however I would not be dogmatic if the tape tells me I am wrong.  My feeling with the MACD topping on the daily chart and the divergence (marked with red lines below) on the 4 hour chart, we should see the market lower, rejecting the 20/50 crossover.