Tuesday, March 31, 2009

SPX Market Recap

Despite today's intraday strength, the sell off in the last 30 minutes of trading resulted in the formation of a lower pivot high on the 60 min. chart of the SPX (click on charts to enlarge).

The significance?

Well, it means the hourly chart is still in a downtrend, suggesting that we could continue this retracement on the daily chart, which to my line of thinking could be a good thing.

The ideal retracement (as I've mentioned in prior posts) is 3 or more days because its easier to find a 2 to 1 reward to risk ratio. Most of the time 1 or 2 day retracements just don't cut it. In terms of fibonnaci retracements, the ideal retracement would be 38.2 to 50. Unfortunately the two day pullback we got on Friday and Monday failed to reach either retracement level.

So personally I'd welcome a bit more downside to give a better setup for bullish trades.

Now, as far as this continued retracement goes, all bets are off If the market takes out today's high, because that would turn the hourly chart into an uptrend. So watch 810 going forward.


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