Thursday, January 21, 2010
Despite a move by China to tighten its monetary policy, U.S. equity markets mounted a strong recovery late in the trading session on Wednesday. This served as a sign that there is
plenty of money on the sidelines and that investors continue to maintain a “buy the dips” mentality.
The March E-mini S&P continues to show strong support at the .618 retracement level of 1124.00. The only obstacle in the way is the high for the year at 1148.00. Volatility has
picked up considerably the past three days, highlighted by triple-digit moves in the Dow.
The market has been hit by bearish news all week, but continues to show resiliency. Although a change in trend is unlikely at this time, the S&P 500 still remains vulnerable to a
short-term correction to 1105.00. Some traders may be lured into buying a dip today because of the action the past few days, but if you follow the “Rule of 3”, the next break is likely to fail,
triggering a sizeable break.
Demand for safety has been …
