Last week the market tested the lower range of support, bounced hard, went straight through short-term resistance we had shown the week before, and never looked back. All bullish. Real test will be what happens when volume pours in the market again come Monday.
The recent move has been strong and the sentiment bullish but keep an eye on the bigger picture: an up-hill battle in a completely broken market. Our guess is that this holiday-induced light-volume rally will be tested sometime this coming week.
If you, like us, haven't traded much in the last 2 weeks then take it easy on Monday as reflexes tend to be slow down somewhat after being away from the market. Make sure to "warm up" first with smaller positions on Monday morning. For you addicts that traded straight through the last 2 weeks, then of course, it's business as usual.
Saturday, January 03, 2009
Monday, December 29, 2008
Yet another day in which the range was inside the last higher-volume/broader-range day, which was Monday, December 22. We would be happy if we could stay within this range until next Monday (not likely but would be nice). Watch to see how stocks react if SPY breaks 85.5; next time around at this zone support will most likely not hold and shorts will gain momentum. If the bulls want to end the year on a more positive note then they have to rally the troops and pull away from support towards the top of this range near 89.5.
Posted by Highchartpatterns at 12/29/2008 05:11:00 PM