Yesterday we said that after 5 successive higher closes, we were due for some profit taking. Well that scenario held up until the last hour, when the S&P took out a key support level that had held all last week. The high volume sell-off (fourth largest one day point loss on record for the DOW), broke the neckline on the SPX inverse H&S pattern that was developing. If we can't hold 800 on a closing basis tomorrow, the bears will regain control.The VIX is forming a symmetrical triangle which is usually a continuation pattern.
Today's sell-off was a reality check given all of the negative economic data - China's growth lower than expected and US in a recession since Dec. 2007. Wow, I thought that last one was already priced in. Keep an eye on all the data this week.
The USD followed 3 successive lower closes with the exact opposite and 62% retracement. I'm still holding out for a sharper pullback, but I won't go into denial if we retest the highs.
Energy and financials led today's retreat and this chart just a big tease.
If the markets do go lower, gold might be a safe haven play after filling last week's gap.
2 comments:
Hopefully we will not close below the base of 800. Thanks for the post
An inside day with a strong close.
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