a) we have stimulus/bank news pending early this week
b) support on financials, real estate, and oil thus far have held
c) market heading straight into resistance
Bullish argument:
Take a look at the following charts: USO/URE/XLF (representing crude, real estate, and financials).
All three went through support, but instead of cratering, reversed back up on very good volume. So far, so good.
Huge move through 28 support on USO on Friday.
IYR is a better representative than the leveraged URE but this chart shows the reversal through the lows in a more clear fashion.
As we wrote last week in the blog; that XLF would break that recent support was a given. What was up for grabs is whether it reversed back up or cratered to the next support level. Thus far, it's the former.
Bearish Argument:
We're heading right into SPY 88 resistance in the market. We've had one failed break-out after another in this bear market and there is no reason to think that this one will be any different. A break-out/hard failure of 88 most likely will result in a reversal back through the trend-line. However, the bullish reversals of the three key sectors of financials, oil, and real-estate indicate that indeed, this time it might be different.
As you can see, there are bullish and bearish arguments to be made. We're just happy we are day-traders and don't have to pick a direction for more than a day.
