SPY:
QQQQ:
What does this last hour of action mean for the market? Is this the end of the correction, is this a bull trap, or will the bears re-establish their shorts and take the market back to the level prior to last Friday, 3:00 pm EST in the coming week?
Barring any surprises or negative news from the Euro-zone over the weekend on the possible risk of default from any one of the Piigs, those candlestick pattern traders that are interpreting Friday’s print of a long wicked hammer or doji as a reversal could cause a short term rally. And then there is the possibility of those buyers thinking the recent pullback has achieved the 8-10% correction, and these buyers coming back into the market could also cause a short term rally. If one was to measure the pullback from the recent high to Friday’s low, the DJIA gave back 8.65% from 10,767.15 to 9835.31, the SP500 gave back 9.21% from 1150.45 to 1044.50, and the Nasdaq 100 gave back 9.8% from 1899.77 to 1712.89, all seem to fulfill the percentage range of a typical correction. But experience tells us the market does not reverse in such an abrupt manner especially after some key support levels have been broken, and that is why I am still remain bearish and I will be looking at any rally for opportunities to build my short positions until the market tells me otherwise.
Here are the updated charts. Click on them to get a larger view and to read the commentary.
DJIA:
SPX:
NDX:
RUT:
