Key Levels Reached

Well, being that this is a new blog, this is the first time I have been humbled by my predictions. I suppose it was slightly arrogant of me to say that it was virtually a lock that we would reach yesterday's highs. There were however, some key levels that I did predict, that came into play.

$104.80 proved to be the high of the day on the dot
$104.41 proved to be .4c away from the key support/resistance level of the day ($104.37).
See chart below

And overall, the day was positive (though mostly flat), it just didn't reach as high of gains as I predicted last night.

Covered SPY at $104.52

Shorted SPY at $103.86

Reversing my position as the downtrend line dating back to 10/26 has proven to hold stronger resistance than I thought.

Closed my position (SPY) at $103.68

Channel Broken

Not good, but still holding my position

Strong Dollar Making it Difficult for My Market to Move Up

The dollar bouncing off the 50 Day Moving Average on the UUP and moving back to the upside is not boding well for my long position on the S&P. But, the channel is still holding up (barely), so I am staying in

Upward Channel for SPY

As long as we maintain this upward channel (see figure 1.), I will maintain my bullish stance on the day. If it breaks down, I will rethink things as a result of the new weakness.

Figure 1. SPY Upward Channel

Bought SPY at $103.65

Points of Resistance to watch for possible pullbacks on SPY
$104.41
$104.80
$105.01

Gapping up? Perhaps Not.

The dollar index is up 0.6% ahead of the market open and has forced more selling than I expected. So there will be no Gap up this morning. However, I still remain bullish on price action after the open... The levels I mentioned in my previous post are still relevant, though the timing will be different and there may be additional resistance on the way up. 

Looking Ahead to Tuesday Morning's Open - November 3, 2009

Well, it would appear the bulls have regained some momentum.

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: