Yesterday we saw a strong move up but this morning the futures are down some as the market digests gains I'd assume. As long as this area hold today we could see another push higher tomorrow. It's important to hold inside the rising channel and we are testing the lower trendline of it right now.
One could argue that it's a "cup and handle" pattern with the Friday high being one side of the cup, the Sunday night and early Monday low making the bottom and the rally into the close yesterday the other side of the cup. Then the sideways action into this morning is the handle. If the lower trendline in the rising channel holds then the next move up would be the rally that normally happens from the handle part, and could takes us to 2700+ into tomorrow.
Failure here would say the high is in for the rally up off the bottom a week ago and and move down to that 2174 low is possible. With the multi FP's that I posted yesterday, the 2240 FP on the SPX would be a possible target. I'm really 50/50 here on what is going to happen next. My gut leans more bullish here as I just think the market is too oversold to just rollover here and die again.
You have to know that all the bears that missed the first HUGE drop (I'm one of them) piled on short yesterday with the double top hit from last Friday. SkyNet rarely makes it easy for the bears, and falling off a cliff here just seems way too easy. My hunch is that this will all turn around by midday and go back up into the close to continue the rally higher. Looking at that rising channel the bulls could keep going until around 3000 where they would run into much tougher resistance. That might take all week and even into next week, not sure?
But it certainly would screw all the bears shorting this very obvious 38.2% Fibonacci retracement level bounce back up. That level is at 2641.38, the 50% is at 2785.75 (which is why I've been mentioning the 2800 area) and after that we have 2930.12 at the 61.8% level. It's again, a tough call for today. I just have to wait and watch to see if the channel is broken or not. My gut (again) tells me it's a bear trap and that it will be reversed back up by the close, and that a squeeze from those shorts could take us up pass to 2800 to as high as 3000 or so.
What I'll be looking at closely at is where the price stops at the end of today. If no breakout happens over yesterdays double top (to last Fridays top) I'll likely be bearish looking for a drop down out of the rising channel to start tomorrow. But if the price level takes out the double top and closes up over it then I'll be looking for the rally to continue to the 2800 area and possible the 3000 zone. Here's Peter Eliades talking about that 3000 level as possibly getting triggered today if the market holds this level or goes up. Have a great day.