After some stubborn upside consolidation we finally had a decent pullback. The very early morning action foreshadowed the drop as a break out above the SPY 127.20 area on Jobless Claim and ECB rate cut was rejected. While we broke down below yesterday’s low, more European rumors gave us a big pop before it fizzled out at the close as the rumor was again denied. The constant news bombardment is keeping both side on their toes.
Draghi had successfully lowered the bar for tomorrow’s summit and we are still in a wide side way pattern between SPY 124-127. For
every 3-5 pts below SPY 124, all the way to SPY 121, there are Fibonacci numbers, the FED gap, and the 50 day moving average. This is certainly a very interesting area as so many numbers confluence in this zone and anyone of them may provide support. If we have further weakness on the summit, it could set up a long trade next week. However, we have to remain flexible and watch for a potential trend change after the multiple rejection above SPY 127.
