If you read my post leading into the Monday morning open, you would see that my second scenario played out almost perfectly. What didn't play out as I would have suspected, is that when we hit new lows going into the afternoon, we failed to dip down to at least $102.09. I have no doubt that we will get there, but it seems that we will go up before we go down. Here's what I see playing out for tomorrow:
Scenario 1) We will probably Gap up a bit... $104.80 to $104.90 (or 0.5%) is a likely price point for the open. The lower the better, because that will give a better opportunity to get in on the profits of an early morning rise in price.
It is virtually a lock that we will reach yesterday's highs of $105.41. I suspect it will happen within the first 30-45 minutes of trading. The high from yesterday as well as a downtrend line dating back to 10/26, provide the resistance here. Some consolidation or a slight reversal is a possibility. If so, look to consolidate down to around $104.84. Whether we bounce off or pass through the $105.40 resistance level, look for the next level of resistance to be around $105.90. That would be a likely high for the day.
Scenario 2) SPY declines off the opening gap up. The lower the opening gap, the more likely we will decline off the open. If this happens, look to fill the gap around $104.37. Even if we decline off the open, we should reverse back to the upside in a similar manner to scenario 1.
Possible scenario for Tuesday, Nov. 3d's Price action; See chart below:
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