Another really brutal day in the markets as we sold off through 1035 right at the end of the day closing on the day lows at 1024. So what does this mean and what are some of the next support levels to be thinking about?
First this is clearly a negative event in the market, but certainly does not mean that we confirmed this break or that we can’t get a move back up and through 1035 which now will serve as resistance. We broke out of 1100 two Mondays ago and all things looked good in the market but here we are 100 handles lower. The SPX spent five days above that level and broke hard to the downside, so next Wednesday could be important if we are still below these levels from simply a time standpoint, this is a minor data point but one to keep in mind.
Second, there are levels of support that we can still hold onto such as 1019, 1008 and of course the psychological level of 1000. This is a dangerous game of course because there are always levels and data points that you can look for to stay long, that is why a line in the sand is so important.
Now the bad news is first and foremost we did close through an important level, one that has been defended a number of times, just as resistance was defended before breaking. The next piece of negative information is that we are well below all Moving Averages that I follow on the daily, weekly and all but the 20 day on the monthly which sits at 995.60 and that is really not a good sign of support.
Personally speaking this has been very tiring and stressful quarter and frankly I am glad to see it go and psychologically the whole street must be feeling the same way. We shall see what the next quarter holds for us, summer rally, confirmation of this break, nobody knows so all you can do is make the best decisions you can with the information at hand and execute your plan as close to perfection as possible.
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