For the first time in months, the markets have had not 1, not 2, but 3 consecutive up days. Everything must be better and we can get back to being bullish right?
Nope. This weeks rally is perfectly indicative of a secondary move, counter trend rally, correction, or what ever mumbo jumbo you want to call it. The facts are that this move has done nothing to change any indicator that I can see, or to break any critical level of resistance to establish a reversal.
The only glimmer of hop that I see for the bulls is that there is a bit of a a divergence showing up on the PPO.
Take a look:
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Support & Resistance
The 38.2% fibonacci retracement is at 772.72, 25 points above today’s close. The next level of resistance would be 800, and for the bulls to have a heartbeat, the S&P must travel up at least another 194 points to 944.09. I really don’t see that happening.
A more likely scenario would be a trip to the downside. In fact, I’m looking for this market to head to 575! I’ll be adding to the short position in the virtual stock portfolio on the open or on the close depending on the market action.
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