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Friday’s rally took the S&Ps to resistance around 870-870.13 was a 50% retracement of the January selloff, and 876 was the swing high from late January.This was important resistance for S&Ps to clear if it was to extend the advance.Yesterday was a narrow range day and a doji bar, indicators for a directional move today.I was watching support levels at 853 and 850 for a downside breakout-853 was a Fibonacci support level, and 850 because it’s “round number” psychological support.Geithner’s press conference and Bernanke’s tesimony were the fundamental catalyst for the morning’s decline.
In spite of today’s dramatic selloff, I don’t think all hope is lost for stock bulls. First, breakout trades such as today’s stock decline are generally not predictive of future moves, in fact, they often reverse themselves the following day. Momentum is giving a buy day signal for tomorrow. and MACD is (potentially) still in a bullish formation.In the short run, support is at today’s low of 819.50 and trendline support around 813.If these can hold. maybe the bull’s not dead.
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