PivotBoss Report for 01/19/12

January 19, 2012 in Pivot Analysis

Market Outlook

The S&P 500 got the upside break from the massive triangle pattern and looks poised for continued strength. These are the levels the index needs to hold in order to continue higher.

The daily chart of the S&P 500 ($SPX) shows the index got the upside break from the large triangle pattern after I wrote this Report for Jan 3. The index has rallied 28 points since the breakout of 1,270, which is only 10% of the 280 points that are projected to come as a result of the breakout.

The fact that the $SPX has broken through, and closed above, the 1,300 level is quite bullish. If price can remain above 1,270 (and especially 1,250), there is a very good shot at a test of 1,350 ahead.

Remember, the triangle (also seen in the weekly chart) has a backend of 280 points, which projects a target of 1,550 over the coming 6 to 9 months. But the index must remains above the 1,250 area in order for the pattern to remain confidently intact.

Key Levels
	Short Term		Medium Term
Index	Bull	Bear	Bull	Bear
NASDAQ COMP	2,750	2,690	2,755	2,625
Dow Jones	12,600	12,300	12,600	12,130
S&P 400	920	898	920	870
NASDAQ 100	2,410	2,350	2,420	2,300
S&P 100	590	578	590	565
Russell 2000	775	758	775	734
S&P 500	1,305	1,275	1,310	1,250

E-Mini Game Plan

Impressively, the E-Mini NASDAQ 100 pushed beyond the major LVA at 2,405 Wednesday, paving the way for a test at the 2,417 upside target we posted. The NQ reached the target and eventually closed the day right at 2,420.

The NQ closed the day with two significant price distributions, which you can see on the 5-minute chart. Since the NQ closed the session strong, more upside is likely for Thursday’s market, but the index must remain above Wednesday’s intraday LVA at 2,412.50. This is key support for tomorrow’s market. If price reverses to this area, look for responsive buyers to defend it, which could lead to another round of strength ahead.

Keep in mind, since yesterday’s price range was larger than average, today could have a moderately sized price range for much of the day. That is, we could see a trading range market develop once the IB has formed.

Here’s my strategy for the day. If price opens with initial selling pressure, look to fade the opening gap back toward 2,420.50. Look to buy a dip into the 2,412.5 to 2,418 zone, with targets at 2,422, 2,430, and 2,441.75.

Swing Trade Signals

Today’s Swing Signal is Helmerich & Payne, Inc. (HP). This stock has fired a new buy signal using the PEMA PullBack system. The PEMA PB system identifies “buy the dip, sell the rip” opportunities during trending markets.

HP has also found monthly pivot range support, which has held each of the last three months as the bull trend has matured. The pivot range provides an additional layer of confluence for the PEMA buy signal.