Day-after-95-point-rally-retracement still looking good

By Paul | Published: November 14, 2008
SPY

SPY

The retracement from yesterday’s monster reversal is in progress.  I intend to take a more hands-off approach now and not have to hug my market screen all day.  It’s just a more practical approach in the long run for me.

So here’s my after-lunch review of the market.  The expected retracement is under way.  We have tested 870 on the S&P and bounced off.  The support test volume was normal, but still 1/3 of yesterday’s volume at about the price level.  I doubt we will break below this 870 intraday low today.

In particular, the pre-11am move looked good because we managed to keep the 880 level.  880 is important because it’s the resistance on Wednesday and the first support level from yesterday’s close.  I didn’t expect it to hold because yesterday’s 95 point move was a bit over done (like everything else these days).

Even if the market breaks lower from here, we still have my mental supporting line of SPY $86.5 (high of the 30 min with the 2nd highest volume time slot yesterday) and the fibonacci 61.8% of $85.82 on the SPY.

I will probably be off for the rest of the day.  I haven’t sold anything yet, since we are in a retracement mode and the test looks strong so far.  I’d rather sell on strength as planned.  It looks like we will zig zag up from here at least for a few days.

Today’s close will provide a sign of what I’ll do with my positions next week.

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