Looking At a Tradeable Bottom

My third eye is telling me that we are looking at a tradeable bottom. Do I believe it in my heart? Not really.  But If I ignore that nagging doubt and just look at the chart, I see a short-term bottom.

The recent range makes an easy stop-loss area of $112.00. Any close beneath that area and new lows are near certain, in my estimation.

I would have liked to have seen a better probing of the lows, but this recent re-test may have been enough. I was pleased to see that yesterday’s volume was right at average and today’s volume was better than the 50 day average. That is the type of volume action I look for when the market is probing lows and trying to bottom.

At the very least, I would expect the recent gap to be filled, with SPY running to 120.00.

Volatility will remain elevated, so expect the unexpected. With volatility high, we are likely to see little in the way of consistent follow-through.

The chart above has lines on it that were drawn better than 6 months ago. I always find it interesting to draw the support and resistance lines and then see how they perform months or years down the road. These lines have successfully framed the recent range, and they were drawn almost a year before this move.