It was a very intense day of trading last Friday. The markets were extremely volatile moving down, moving up, down, up, down and finally closing near the highs of the day. My view of the markets today is much the same as it was at the close of trading on Thursday, that is, bullish. The fact that the markets were so resilient by not letting the sellers win the day, just confirms the bullish viewpoint I had heading into trading on Friday. That being said, I certainly don't expect a move straight up. Although there is a bullish edge right now, we must still be cautious and prepare for a continuation of the choppy environment. And it will not be a surprise that as soon as we get comfortable with the volatile up and down moves, we will see a power move to either the upside or the downside. We must never be comfortable and always be prepared for both the expected and the unexpected.
Levels to be aware of for tomorrow:
SPY
If we can get confirmation above $108.30, that would be a point to go long.
From there look for resistance at: $108.60, $108.92 (Opening gap-down from 2/4 at $108.98), $109.52, $109.86 (Gap Fill), and $110.45.
We can also look to buy into a retracement. Some support levels to be aware of for a potential retracement are:
$107.41, $106.94.
Also, if you look at the past 5 days of trading on the SPY, you can connect each day's higher low with an uptrend line (see SPY chart below).
SPY 10 minute chart. See important support/resistance and Fibonacci levels.
That uptrend support line (as seen in chart above) could be a potential low for the day. If that line is broken with confirmation, that would mark the end of the bullish sentiment and we could see a move down to $105.81 and if we move below that, we could retest the lows that we saw on Feb 5th, or the mid $104s. From there we could head down to the low $102s...
I don't know about you, but I'm looking forward to market open...
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