Today, Tomorrow, and the Next

• Thursday was an absolute bloodbath on Wall Street as the S&P fell 39 points on strong volume and closed right at the lows of the session to 1283.
• In the short-term, we want to be cautious here and keep a close eye on oil prices.
  • A break above oil’s recent trading range will pressure the S&P lower.
  • That being said, this market is very due for a bounce. If oil sells off, or at least doesn’t breakout, the markets should bounce.
  • We closed right at the low of the session, which is often a bullish signal.
  • Financials actually held up OK today and did not lead the markets lower as they have recently.
• SPX Key Support Levels
  • 1283 ~ Thursday’s low/close
  • 1273 ~ lowest close this year (March 10)
  • 1257 ~ lowest intraday price (March 17)
• SPX Key Resistance Levels
  • 1315 ~ support from earlier this week
  • 1327 ~ 61.8% Fibonacci Retracement
  • 1335 ~ Support in previous range

Over the Next Week or Two

• StockTock believes that the overwhelming bearish sentiment is a ripe environment for a rally. We are calling for a bounce over the next few weeks.
• The WV Pattern on the SPX weekly chart is still in tact, though the market is threatening to crack and make news lows. If the S&P closes below 1273, we will have to re-evaluate.
• The long-term outlook is dependent on the price of oil. A continued move higher in oil prices is not priced into the markets.
• The pending rally will test and likely break above the 1370 resistance level, allowing for a push towards 1405 and then possibly 1440.
• The pending rally will likely be led by technology stocks, which have strong relative strength.

After That

* The stock market is in a Bear Market.
* It is difficult to say how long the pending rally will last. As the charts fill out, we will update the outlook appropriately. Credit market concerns have not gone away and high energy prices are a long-term issue for the economy.
* A summer rally will fulfill a WV pattern on the weekly chart of the S&P. This rally may take the S&P above the 1440 level.
* There is still a chance that the WV pattern cracks and takes the market to new lows.

The Market Outlook changes each day as the charts fill out and provide more clarity.