Yesterday started out as planned, or at least according to yesterday’s quantitative levels of 1366 / 1377. After opening up flat, the SPX took to higher levels immediately following the 10 AM economic releases–specifically the revision to last month’s New Home Sales and the Richmond Manufacturing Index.
The SPX struggled around 1375 for the majority of the morning, eventually slipping on the back of Apple’s (AAPL) continued selloff. We never did breach the 1377 level–a level I was more than willing to sell at. If you were not overly aggressive, you still could have scalped a percent on Monday’s purchases. At the end of the day, the market felt very similar to that of last Friday; positive, but no where near the highs. Additionally, we once again settled near the middle of my quantitative range. Futures rallied after hours as equities live and die by The Apple.
This morning’s Oversold level is set at 1362; Overbought level is set at 1372. It is a tight range and even the slightest upward movement will be considered, quantitatively, Overbought. As of this writing, it appears the SPX may gap higher and I will, without hesitation, take profits. However, I would suggest letting the tape develop before looking for an immediate selloff. I think this tight quantitative range will eventually lead to a breakout and my contention is that breakout will be to the upside; making new yearly highs by mid-May in the SPX. However, I am weary of volatility and would prefer the SPX above 1390 sooner rather than later.
Ultimately it comes down to this: who is feeling more pressure, the bulls or the bears? (Hint: the bears)