As you can see, the S&P has been on a three-week tear that has taken us convincingly above the January highs. Having broken above 1150, the next line of resistance is clearly the 1240 area that hearkened the sickening slide of October 2008. There's a long way to go from 1150 to 1240.
But - do you believe in Fibonacci circles? If so, check these out, centered on the March 9th lows. Each Fibonacci level has been followed shortly by a pullack. Only one level remains that has not seen a pullback, or should I say pullback yet - the 1.618. Interesting stuff.
Personally, I now refuse to go against the trend and am willing to just go with the flow until proven wrong. I think we'll break 1200 before long, but maybe not before another short sawtooth down first. Finally note that only seven times in the last 10 years has the Dow gone on a streak longer than seven days (where we're at now).
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Hi Michele, I saw your invitation for comments here on Traderfeed in the Virtual Group post.
ReplyDeleteI'm just a rookie trader but here's what I think about the price action so far.
Yes, the rally has been ridiculous. Overbought alarms are setting off everywhere. Yet, looking at the price alone, the uptrend is clearly strong. On the other hand, market sentiment and volume has been waning even as the market goes up. Thus, my conclusion is that I don't know what the market is up to...
On top of that, the Greece problem is still up in the air.
Thus, my intention in the short term is to stay on the sideline until the market shows its hands.
Thanks for the comment, Paul. I've pretty much come to the same conclusion. At this point, all the smart money is in and has been for a while. The continuing "melt-up" as the CNBC wags are calling it, is due to the "average IQ" money coming out of CD's. When the dumb money shows up, it's time to go. For now, I'm holding my long positions, but neither adding to them nor going short on anything.
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