We Have a Technical Bounce. Now What?

Just as I suspected, the market found support at the lower line of the bear flag. Now what?

Yes, yesterday’s open was a tad scary. Hopefully you were not shaken out, selling at the low. I’ve been saying for over a month now that volatility would be the highlight of this market, and yesterday was no different. The market moves up and down, but when volatility is elevated, it REALLY moves up and down. While it did find support at the area where we suspected it would, it had also fallen 2 days in a row, and was simply due to bounce.

I do not think we’ve seen the bottom. I don’t know when we’ll break lower from this bear flag, but I do believe we’ll break down from it and not break out of it.

For now, this bounce could carry us to $120.00. That would be a conservative place to look to lighten up. Because the market is volatile, it could run all the way to $122.50, where it would find some resistance. I do not see it running to $125.00, where it would find the upper line of the bear flag, but it surely could.

The bottom line is that we’ll have to let it run for a day or two, and then look at the volume, and indicators, and make our best guess about where it will turn again.

I plan to run some studies tonight to see if we can glean anything from past market history. Until then, enjoy the bounce.