Pre market analysis Tuesday 5-3-11

News: Factory orders @ 10 AM

Trade plan: So the market has been grinding higher and I was expecting a balanced session yesterday and most of this week. For the most part the day was balanced but we did start to see some responsive sellers step in and move the market lower in yesterday’s session. Value expanded and the range on the day got bigger (13 points or so) then the recent norm. And the vpoc shifted lower throughout the day closing at 1357.75. With the recent uptrend the market could use a little breather so a pullback wouldn’t be unexpected. The question is how far will it pullback? Over all buyers are still in control and im bullish above the 1349-1351 level short term. Without any real market moving catalyst tomorrow im expecting a range bound day to take place. Globex has been establishing value lower throughout the night building acceptance at 1354.50. We currently are bouncing off of the 1349.50-1351.00 level as i expect buyers to maintain this area to remain in control.

Bull scenario:

Value built lower yesterday and in globex so im becoming a little more bearish. I still believe buyers are in control above 1349.50-1351.00 area short term but sellers could test below that level today so i will be cautious getting long there although i do expect a bounce on first touch of this area. Below that area we could get a fast liquidation down to the 1340-1342 area where i expect buyers to be active as well and will be looking for long opps as well. If trade is slow and balanced we could get a rotation at the 1345-1347 area so i will be looking here as well. Over all buyers in control and context is bullish above the 1349-1351 area so i will be looking for rotation at each support level below unless we get an OD type open.

Bear scenario:

For the short side i will be looking for shorts at resistance if the day sets up as being balanced. After the responsive move lower yesterday i believe the buyers are getting weak up here and the sellers are starting to step in. If this is the case then i will start to see more of a reaction from the sellers at resistance areas. In which case i will be looking to sell the rotations off of the resistance levels. I have resistance level and globex highs at 1357-1359 area which is also the vpoc from yesterday and if sellers are going to continue their selling they will want the market below this area a break above that could bring in a test of the highs again. I have resistance at the highs at 1366.50-1368.00 but i will be cautious selling the highs of the year as we could break higher again. There is also minor resistance at 1361.75 and we could see a reaction there as well.