Wednesday, May 13, 2009

b2b - Back 2 Breakout

With today's gap down, we're now on our....dare I say it?.... 3rd day down. Haven't seen a three day retracement since all the hullabaloo (read: insane rally) started in March. So what's it mean?

So far I'd say buyable dip - after all- EVERY dip has been buyable since the March lows. Definately too soon to say this uptrend is done- bears don't really have a technical case yet. NO double top, NO head & shoulders, NO slowing momentum. Overbought yes, but let's be honest we've been overbought for a long time- so that viewpoint doesn't really hold salt right now. The bull has skewered the overbought crowd left and right over the past month (I've got the wounds to prove it..... May bear call spreads *sigh*).

As the S&P 500 is pulling back, I'm drawn to the 875 level which was formidable resistance on the way up. One would assume it then becomes formidable support on the down. It also served as a breakout point on May 5th. Oft times those that missed buying a breakout are granted a second change by way of a retracement or retest of the breakout point. We're not only seeing this in the S&P, but many other bullish charts. Take a look-


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