Sign Of Support?

After more than a week of high volatility, some signs of possible support started to appear. Scanning through my list of stocks, I am beginning to see a lot of them are near or at key technical level that could provide some supports. Last Friday’s opening dip and bounce back indicates a degree of capitulation. Of course, this one day bounce doesn’t mean the market is ready to head back up. There were certainly some bargain hunters came into the market to push the market up on Friday, and I believe there will be another shake down to get rid of the last holdout of the weak hands.

In the SP500 weekly chart I put up, one can see the level near 1000 is a key technical level. If it breaks below 1000, things can get ugly. In the coming week, we need to see some consolidation from the market and the SP500 needs to be able to hold above the Feb. 2010 low. If it breaks below the Feb. 2010 low, then a lower low will be made by the SP500 on the next bounce and this could be the beginning of the lower-low/lower-high formation for starting a new down trend.



Unless I am day trading, I will remain on the sideline and wait for this market to show its hand on which direction it is going to take (retrace to Mar. 2009 low or move above the Apr. 2010 high.) Certainly I wouldn’t be surprised to see some big oversold rallies in the coming days, but I will wait for a pull back from these rallies before considering going long.