Via Dynamic Hedge
When the markets are dropping and volatility is high, traders are well advised to disregard garden variety technical tools. The same goes for momentum markets, which are an odd inverse of markets in panic. Momentum is a club-footed sprinter who occasionally stumbles on resistance (and himself) on the way to higher prices — making a fool of every top caller in the process. $SPX 1370 is the number now, and the momo crowd has it in their sights. The reason? There are buy stops there that must be taken out.
If and when we get to 1370 there will be a massive rotation of holders. We’ve seen how this movie plays out a few times before. My guess is that shorting at 1370 will look really good until it doesn’t. Similar to how shorting 1220 looked good in 2010 until it didn’t. See chart here.
Read the rest and see the charts here.
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