Earlier this morning I wrote that I think the next couple of days could be pivotal for the markets. What makes the think so, and what will “tell the tale”? Let’s look at stocks to see.
Below is the daily chart for December S&P futures. The most recent up leg topped last week, at 1099.00. From that high, they have declined to yesterday’s low at 1037.25, a decline of 5.6%. A 50% retracement of the rally is at 1055.50; it broke under it, and then regained it yesterday. Yesterday’s rally was able to get back to Wednesday’s high, but was unable to take it out.
The bottom panel of the chart is the 2 day rate of change indicator, I use it in the same manner as momentum; I circled the last two sell short signals.
So far, today has behaved as a sell short day should. Spoos opened around yesterday’s high, and have sold off as the session progressed. The midpoint of yesterday’s range is 1050.63; breaking that could lead to a retest of yesterday’s low.
Watch the 1050 level
This is where the significance of today’s activity comes in. In the daily chart below, since making lows in August, there have been four corrections in the rally. Yesterday’s selloff stopped at that trend line (the TL was at 1035.75; the low was 1037.25). Today that trend line comes in at 1037.25. A break of that trend line indicates we’ll see more than just another correction in the bull market. Stay tuned.
Will the trend line hold a fourth time?
This is a sample of the analysis from my Swing Trader’s Insight advisory service. For information on STI, and to sign up for a free two week trial, visit here.
The information contained here includes information from sources believed to be reliable and accurate, but no guarantee is made as to accuracy, nor do they purport to be complete. Opinions are subject to change without notice. Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
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