MARKET ATTEMPTS REBOUND FROM OVERSOLD CONDITION -- SPY AND QQQQ EXCEED INITIAL RESISTANCE LEVELS
S&P SPDR OPENS ABOVE RESISTANCE... Yesterday's Iraq election -- and a drop in crude oil this morning -- led to a higher open today. A short-term oversold condition also helped. The 30 minute bars in Chart 1 show the S&P 500 SPDRs (SPY) opening at the highest level in more than a week. Volume also picked up on the price bulge. Now it's a question of whether the market can hold on to its early gains and then build on them. Chart 2 shows an hourly bar chart of the SPY. It shows the SPY challenging a down trendline drawn from the early January peak. If the SPY is going to mount a more serious rally attempt, it's going to have to break that resistance line first. If it does, the next resistance level would be near 119.50.

Chart 1

Chart 2
NASDAQ 100 ALSO TURNS UP ... The hourly bars for the Nasdaq 100 Shares (QQQQ) also show it trading at the highest level in a week. If it can hold onto that gain, it might attempt a test of initial overhead resistance along 38.0 and the overhead gap area just over that level. The QQQQ needs to clear that gap area if any serious rebound is going to occur. The hourly bars in Chart 4 show that the QQQQ is also challenging its January down trendline. That's the first hurdle it will have to overcome. Last week I wrote that the proximity to its 200-day average made this a likely spot for a rally attempt to begin in the Nasdaq 100. Today's bounce could be the start of that rally attempt. Chart 5 shows the QQQQ trading just over its 200-day line. Its RSI and stochastic lines are starting to turn up from oversold territory. Since the Nasdaq has been the weakest part of the market, any continued buying there should support a relief rally in the entire market.

Chart 3

Chart 4

Chart 5