This is it! The pullback that I think bulls have been looking for since the Dow Industrials jumped to as high as 8,522 two- weeks ago has come and per my "plan" to buy a pullback near 8,050, I've profiled a bullish trade in the Dow Industrials for 1/4 positions. It isn't pretty right now, but current levels of trade are points where I would now look for some "old bears" that didn't protect positions a couple of weeks ago, to perhaps begin doing so at current levels of trade. Not only as it relates to the Dow Industrials, but the other major indexes at well.
Dow Industrials Chart - Daily Interval
To say or think that I'm overly bullish in my own account would be untrue. On Friday I did profile and take in my own account and Dow DIAMONDS (AMEX:DIA) $80.12 -1.77% put trade in the DIA May $82 (DAVQD) as a level of support was broken that had me thinking the Dow Industrials and DIA would most likely try and test the 8,000 level. While my current position is somewhat "neutral" I remain longer-term bullish at this point, but near- term cautious from the bullish side. Still, I think new position bulls can be taking partial bullish positions in the Dow Industrials at current level and I will be looking for firm support to build at 7,902-7,844 if not at current levels of trade at 8,000.
It has to be "tough" psychologically to buy anything today with this morning's economic data from the March Chicago PMI falling below 50.00% for the first time since October, but it is my view that some of the decline may have come from the then pending war with Iraq. I can't say for sure that the entire decline was related to concerns among consumers and purchasing managers in the Chicago regarding war with Iraq, but I do feel that with coalition forces now approaching Iraq, that a coalition success is worth the bullish risk of 1/4 position right now.
Sector action remains broadly negative, with Gold/Silver (XAU.X) 67.20 -0.68% still today's sector winner, but a broader market equity bull might like the fact that the XAU.X is off its best levels of the session. Earlier this morning at the 11:00 AM EST hour, all other sectors were showing declines, but the HMO Index (HMO.X) 534 +0.15% and Utility Index (UTY.X) 247.70 +0.39% have edged into positive territory.
The broader S&P 500 Index (SPX.X) 851.82 -1.35% has received a bounce from its session lows of 843.48 and has been able to claw its way back above its WEEKLY S1 pivot analysis level of support of 850. Here too is a technical level from the point and figure chart of the SPX where a triple-top buy signal of 835 was generated on March 17th, which further triggered a rally to the recent relative highs of 895. This morning's decline to 843.68 did bring the SPX back into the top of some past consolidation where I look for "old bears" to try and cover at either break- even, or fractional losses after seeing an SPX decline to 790 be quickly erased two weeks ago as early coalition success in Iraq was found.
The NASDAQ-100 Index (NDX.X) 1,023.40 -2.2% did trade its conventional retracement 38.2% (1,017.99) level of support this morning at 1,018, but this is a level that served resistance for all of February, which under current testing should definitely (in my opinion) find buyers. It was at this level of NDX trade that I (Jeff Bailey) as a previous bear on this index, had to consign defeat on the break higher. With that past thought, I would not have to be a buyer at these level, and at least be looking for a technical bounce back near the 1,050 level in sessions to come.
Treasuries are starting to steady after a strong round of buying this morning. As mentioned in previous Index Trader Wraps and in Friday evening's market monitor, I looked like the 10-year YIELD ($TNX.X) might find buyers to 3.8%-3.75%, but that we might expect that level to find sellers. This morning's low YIELD trade of 3.797% is within the range of YIELD support that I had tried to correlated a Dow Industrials trade of 8,050-8,000. Again, I like these correlation near-term as levels for partial bullish entry points.