…at 877.75, the upper end of our posted support area.  Market will have to get above VWAP, which has held all day and is now at ~887, to get a real extension to the upside and see short covering.

Update: Corrected VWAP to read “~887″, not “~877″

Bonds continue to sell off in the afternoon with yields rising to 4.312% now and could test last week’s 4.386% interim top.  The flight to quality issue we deemed extant in a previous report this week may be coming to an end.  Bascially, the market is calling Bernanke’s QE bluff.  Inflation is around the corner.

Next support confluence area is 875.25 to 877.50.

See below for our market internals chart that shows VIX breaking a minor trendline support (second down) and NYSE adv:decl ratio right at trendline resistance (third down).  If VIX goes down and adv:decl goes up, we likely have a bottom into tomorrow.  We will update on a confirmed break, if it occurs.  S&P 500 financials as measured by the XLF ETF have held up well, NASDAQ bank index not as well, but no new lows since just after 11:00 am.  Market has sold off on VWAP per our earlier post, so we want a break of  889.75 to head higher (testing now).

Look for 50% retracements to hold with a stop below the 61.8% retracement.  889.25 is key area as it is current day point of control, VWAP and the 61.8% retracement from the day session high.  Many trapped longs from earlier will be happy to get out at break even just below this level, so we will need to see high ticks and volume to break through.

The market has worked its way down on accelerating volume to within one tick of the high value point of control level of 882.25, also close to the 50% retracement from the Apr 28 2009 low.   If this area does not hold, Please Login or Register to read the rest of this content.

The conference board released its leading, coincident and lagging indicators today at 10:00 am for the month of April.  We and many others follow the ratio of coincident to lagging indicators because Please Login or Register to read the rest of this content.

NYSE net advance decline (-320) and ratio (-5.75)  opened very weak, but no Tick <-800.  Market has just retraced to VWAP.  Day trade shorts in the ES can enter at Please Login or Register to read the rest of this content.

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Nasdaq bank index has reversed the entire week’s gain and taken out Friday’s support.  Our critical support area for the day did not hold, but the market has found marginal support in the ES in the pivot/gap area.  Low at 907.00.

Traders will be looking for the Fed’s thoughts with regard to Please Login or Register to read the rest of this content.