I’ve looked at all my screens–breadth, volatility, and some others– and I’m not seeing anything here that gives me any conviction one way or the other for tomorrow. Breadth is nearing levels that typically mean a bounce is close, but we are not there yet.
My gut says that we get some follow-through on the downside. I’ve got a support/resistance line drawn on SPY at $122.21. This line has served me well over the last 1.5 years. I’m looking for that area to provide some support. Should that area not hold, SPY will find itself near to re-entering the previous consolidation zone established from August to October. The next area of support is the 50 day simple moving average which is currently at $120.64 and just at the top of the previous consolidation zone.
I believe we are in a wait-and-see consolidation period. We are waiting to see what will happen in Europe. My opinion is simple: We are likely to continue trading between the 200MA and the 50MA until something definitive happens in the EuroZone.
I am still proceeding as if we are in a bear market. Therefore I expect that the volatility will continue and I’m guessing that the next big move will be due to news about the crisis in Europe.
Sorry for the lack of conviction. Sometimes it is best to know when you don’t have an edge and just sit on your hands until a clear signal is given.
There is plenty of conviction here to sit on the sidelines and wait for an edge 🙂
@Wood, since when is “sidelines” a lack of conviction? But then, I think it’s the proper position, so WTF do I know. I’ve got my longs hedged to the extent I can, but it’s still the toughest market I’ve seen.
Very very tough market.
Yep. Bear market rules are still in play. Nothing by low probability swings considering the news drip. Lot’s of chop and viscous morning gaps. Joy.
lol…exactly. No love in mudville.
“My gut says that we get some follow-through on the downside. I’ve got a support/resistance line drawn on SPY at $122.21. This line has served me well over the last 1.5 years. I’m looking for that area to provide some support.”
SPY closed at $122.11
Just sayin’…