Yesterday:
The S&P hit the 931.92 range topping out at the 100dma and tested the 100dma again near the close at 727.96. Since prices were only 6-8 points from my target it made sense that prices became overbought on the short term needing a corrective move.
“The bulls need to think of this move as a two to three day rally, followed by a corrective move. This corrective move must occur if the move has any chance of extending itself for any length of time.”
“There should be a corrective move or a retest that will happen very shortly. Prices need to hold important retracement on any corrective move if this move has any chance of continuing higher.” This is where we are today….
Today:
Prices should go through a corrective move but prices need to hold the 690 or 700 range. It is in these ranges that prices may clean up or strengthen. I had pointed out in the previous comments that prices need this corrective move if they have any chance of continuing higher. I need to clarify my comments, since I received some email that felt I was bullish on this market. This is not the case and as I had pointed out before, I still feel we will head into the 400 range in the future. I am bearish on this market but as a chartist I must advise my readers when prices attempt to create a bottom. This does not mean that it will be successful in doing so, only that there is a possibility. I do not feel that this rally (if it can hold the retracement) will last very long, since there will be a great deal of inventory and bad news applying pressure on the upside.
Bulls: The bulls need prices to hold the 690 or the 700 range if this move has any chance of moving higher. The 700 range is where the 50dma is on the 60min chart so that is important price point. Prices must gain strength in these ranges and a break of the 100dma would be bullish. If prices could hold the 38% retracement at the 710-712 range that would be a good sign for the bulls, since it may indicate greater strength.
Bears: The bears need to be mindful that prices may hold in the retracement range since the jury is still out if the new trend will last. It is normal to see these corrective moves backfill if they are to advance further, so this is what traders must evaluate today and let the price action tell you. I am still bearish so I wouldn’t be surprised if this move failed and we broke to retest the prior low or the 640 range, but I will let the price action tell me.
Support / Resistance:
738-740 2nd resistance
728-730 1st resistance
710-712 1st support
700-703 2nd support
Notes:
This pattern is in a crucial point since prices are at a crossroads where they show or confirm the new pattern. So far the price action has been trading correctly under the circumstances, so this is normal to have prices backfill (to absorb sellers and attract new buyers) so they can advance higher.
Gannfann
Recent Comments