Friday, June 19, 2009

Pre-Opening Briefing: Accepting Value Higher

After yesterday's session in the S&P 500 e-mini (ES) index (bottom chart) held above the prior day's low, we saw strong buying on the morning economic news and then proceeded to accept value higher at the 914 area of resistance. That level then became the base and springboard for trade higher overnight, as we now are accepting value (side histogram) in the 919 to 921 region. The day's trend stays bullish as long as selling cannot take us back into yesterday's high volume area; that resistance should now act as support.

9:27 AM CT - Here (top chart) we see why it is helpful to track sentiment via volume at bid vs. offer (Market Delta; bottom histogram) as well as via NYSE TICK. TICK was strong early this morning, reflecting relative strength among small cap stocks. We saw more selling pressure than buying pressure in Delta, however, providing a nice alert for the downside market break. If the market is to sustain trend mode, we should see Market Delta and TICK moving in unison; if not, we're probably in a rotational environment.