By: T3Live
Patti Domm, at CNBC, turned to Scott for insight into the whether this market correction is over, or whether more downside awaits. Here is an excerpt from her blog:
Getting Technical
Traders have been debating whether the market remains in a correction mode, and how much lower it might go before resuming the rally. The triple worries of China pulling back on bank lending; political risk from both Congressional efforts at reform and the Administration’s policies, as well as the European sovereign debt fears have collectively stalled the stock market’s rally.
The Dow fell 20 to 10038 Wednesday, and the S&P 500 was down 2 at 1068.
“The question is did we have enough of a correction? Is 9 percent for a pullback enough?” said Scott Redler, who follows the market’s short term technicals at T3Live.com. Redler said if the S&P 500 closes below 1060 to 1065, it could retest the 1044 level, its intraday low last Friday.
He said the S&P 500 appears to be forming a “wedge,” a technical pattern of indecision which sometimes precedes a powerful move in either direction.
“Sometimes when you don’t know what the next move is going to be, you see this back and forth activity, where volatility is constricted,” he said.
“Either the bears are going to win, and we’re going to break 1044. Or, the bulls are going to win, and we’ll snap back up to 1085/1090,” Redler said. Two stocks to watch, he said are Apple and Goldman Sachs, market leaders in key sectors. On the downside, Apple would need to hold 190 and Goldman would have to hold the 150 area.
“If those supports go away, we would be resolved on the downside,” he said
