The low of 1270 was put in place January 23rd. It was obvious that MSNBC was waiting for "true capitulation". Seeing oversees markets sell-off during the MLK holiday gave analysts and traders time to prepare buy orders for the next morning because "a sell-off to this extent must be capitulation". Buyers in this region enjoyed up to 33% (and higher) returns within approx one month. Within 2 days of 1388 being in place these same returns diminished to 9%, and those who failed to sell would most likely be holding a loss by now. The first warning sign for daytraders and swing traders to sell occurred Wed Feb 27th when a "fifth wave failure" (or double top) occurred. Longer term investors *should have got their sell signal Friday Feb 29th when the S&P gapped lower and opened below 1360.
The rally from the low of 1270 lasted for 26 trading sessions and is currently almost completely retraced within 7 trading sessions. Since the rally was retraced in 27% of the time it took to form, this positive market action better fits the description of a "correction" while the trend remains down.7/26= 26.92%
Look for the words "V Bottom" to be mentioned on MSNBC next.
This "V" bottom should occur *IF* the spx.x finds support in the 1206-1214 region. This rally could take us all the way up to perhaps 1500 or lower. Would this rally be a correction? If so, then expect a decline of 570 - 920 points.
No comments:
Post a Comment