I’ve Got Your Fortune Cookie Right Here

Let us read the “tea leaves,” as the folks on television would say.

The 30-minute chart of the SPY, ETF for the S&P 500 Index, below, reveals are few interesting technical developments.

First, the “bear flag” we discussed yesterday (light blue lines) actually did begin to resolve lower (on this timeframe only!) in the form of a gap down this morning. However, bulls will claim a “double-bottom” with the lows of Wednesday’s holding true as we speak.

So pick your bias, as there is competing evidence for the bulls and bear case alike. That said, consider how many short-term stop-losses are now under this morning’s lows, roughly 1635/6 on the S&P, and the waterfall effect a breach of it would have. On the upside, a breach of 1655 again throws a wrench in the bear hope, in all likelihood, of an imminent deeper correction.

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