We talked last night during our Night Moves trading session about watching the open today. The SPX closed above its January close and sat just over the great 1050 divide . If we developed a gap up overnight we can watch to see how well that 1050 area holds. A gap down and the 1050 becomes resistance. The gap is important today. What has us set us up for the positive gap so far has been overseas so lets spin the globe.
Asia
Japan continued its winning ways with another good up day. The Hang Seng had a tough mid-day but managed to rally into the close. The Shanghai however fell apart in the afternoon moving from what had been a flat day to a 1.24% loss. So Asia paints a mix picture for us this morning.
Europe
Europe on the other hand is green across the board this morning. A morning rally in the DAX, FTSE and CAC have driven those markets up between .28% and .8%. They are trading on the highs of the day as of 8am
. 
United States
Economic news
So all that world market strength has set us up with a small positive gap this morning. SP futures are up 2.25 points. It will be this mornings news that makes the final decision about our opening preference. Retail numbers will be out this morning and these numbers may still be effected by the February weather or they might contain a bounce from the January weather. Either way a reading outside the norm will be talked around. That news will decide which side of the 1050 divide we will fall.
Earnings
Breadth Charts
40 DMA % Index
We have now moved from just 22% of stocks on the NYSE above their 40 DMA to now 84%. That is a strong move and yesterday's price action added more. This chart continues to be bullish but as I have said the last 3 days, I am expecting this to curl over here. Today it scores a +6.
10 Day High - Low
This chart is showing some weakening sentiment. The RUT has put in 4 days now of lower values while still making new highs. The RUT indicator is actually flashing sell today while the NYSE and NAZ are still riding on their past 5 day momentum. Today is fish or cut bait day for those two indices as in order to keep the momentum going they will net to put in higher bars than 5 days ago. To meet that requirement we are going to need a very strong day indeed and will require a leg-up to get there (like a gap up opening or a strong rally from the start).
Today this chart scores a -2 with the RUT putting in the -2 and the NYSE and NAZ scoring a neutral 0.
52 Week New Highs
Like the 10 Day High - Low charts this 52 week new high chart is showing weaker performance and will require a rally today to restore its bullish momentum. The NYSE will have to put in over 200 new 52 week highs in the first 30 minutes to make its end of the day mark of 466. That will require a very strong opening so again it is up to the 8:30am data to prep us. If we open weak and rally I will short the rally. If we open strong and rally (with the new highs hitting their targets) I will join the train.
Conclusion
| Chart | Score |
| 40 DMA % Index | +6 |
| 10 Day High - Low | -2 |
| 52 Week New Highs | 0 |
| Total | +4 |
Still clinging to its bullish ways the market needs to put in a strong performance today to keep those scores bullish. Any weakness today.. like a sharp selloff (even if we rally back) will leave us with strong bear scores at the end of the day.
$SPX
If we break out of 1150 today I would have to go back to 2008 to find resistance levels. I didn't do that, I will this weekend. For today know that the sky is the limit on the upside. On the downside the 1150 we have talked about is support, below that 1145 should be strong support after that 1140.
Bulls Plan: If handed a gap up take it and run away from 1150. If forced to fill the gap do so quickly and bounce back to make new highs.
Bears Plan: Close any positive gap. Turn the day into a key reversal day and close below 1150.
Simple plans. Watch the divide (1150).
Hope to see you in the markets... or better yet in the trading room http://ttthedge.acrobat.com/traders
Marlin aka RedlionTrader
