Made An Attempt

The SP500 made an attempt to breakout of the double bottom pattern today. It was not a surprise to me to see it retreats after it has reached the 1106 level. The reasons I was not surprised by the reversal at 1106 level are 1) first breakout attempt on these popularized price pattern usually fail, 2) too many stocks faded from their opening up gap while the market indexes grinded higher, 3) too many market participants were waiting for the breakout to occur.

Does it mean today’s failure on breaking the double bottom pattern will result in further selloff? The answer is “not necessary so.” It can sneak up on us and break above it tomorrow, it can regroup by pulling back toward the 1075/1080 level to attract more buyers for the next push, or the bears get bold and drive it down to the 1040 level in another attempt to break below it. Therefore, until one of these possibility plays out, I will monitor the 1075-1080 and the 1106 level for market direction. Since this week is also options expiration, I will be very cautious and try to avoid from being sucked into a position due to false breakout caused by OPEX volatilities.

Here is the latest SP500 daily chart:



And the 15 minutes intraday chart on the SP500: