Too Much Too Fast

The market continued its rebound from the October 15, 2014 low with some very impressive gains on 10/21/2014. The SP500 gained 1.96% by adding 37.27 points, Dow Jones Industrial up 215.10, a 1.31% gain, Nasdaq 100 put in a rare performance by adding 101.31 points or 2.62%, and the Russell 2000 ended the session with a gain of 17.88 or 1.63%.

The SP500 went above the 1920 level without much resistance and getting close to the next potential resistance level near 1946. Since the 10/15/2014 low, the SP500 has regained 120.62 points or 6.6% within the last five trading sessions. The pace of regaining some of the recent losses is much too fast for the market to digest, and a selloff can be easily triggered. The market is probably in a mode of looking for an excuse to sell or to take profit from recent gains. The following charts present some likely levels to monitor for next turning point and for potential support when the SP500 and the SPY retrace toward the October low.

SPX:
(click on the chart to enlarge)


SPY: