Economic Reports Due Out (Times are EST): New Home Sales (10am)
The Breakdown:
- Futures are sky-rocketing ahead of the open – S&P up over 30 points.
- Asia traded up on average of 1.7% higher, while Europe is trading with gains ranging from 2.3% up to 3.7%.
- The S&P is looking to bounce after 7 straight days in the red, four straight outside the lower bollinger band.
- From the October lows to the October highs, we have retraced perfectly to the 61.8% retracement level on the S&P.
- Leading up to today, this was the a near perfect bounce environment
- Two S&P resistance levels to watch today and this week are 1191 and then at 1218.
- Finally, a break of the downward trend-line (mid-term) off of the October highs would effectively end at 1255 (resistance is declining).
- All indicators point to a very oversold market on both the short-term and intermediate-term time frames.
- Volume has been tapering off the last 5 trading sessions. Mostly due to last week’s holiday schedule.
- If we can hold most of the day’s gains, we should be able to see a nice multi-day rally out of this market.
- All significant moving averages are above the current price action.
- Worth noting as well, is the obvious head and shoulders pattern forming on the weekly chart. Should this be the case, I’d expect then that this market is reaching a short-term top very fast.
- Make sure that whatever you do, that you protect the gains that you have, and be ready for sudden and quick reversals in this market.
- My Conclusion: Bounce is well overdue, regardless of the news in Europe, but often technicals do line up nicely with economic news as we are seeing today. I think it is safe to say that this market will likely rally over the next couple of days.
