Today SPX had a consective three day rally to 1164.97 with 1.88 percent gain leaded by the financial sector. It is not surprise that the rally in the passed three days. In the weekend post, I said a short term reflex bounce is very close. Unfortunately, I did not take any advantage of this rally. This is a lesson for me: When the MM says the market is really oversold, place money in 401K funds, palce money in the long ETF, even though it can gap down to a lower level, but the bounce is due and can be very very powerful.
Commodity are up today with silver up 5.19 percent. The euro FXE was up to 134 with lower volume. If FXE starting to pullback tomorrow, equity will follow also. Or FXE may go up 20MA, 135 zone?
Today most of the index are backtest their broken trendline, 20MA, 61.8 fibonacci retrace zone. I think this is a fairly strong resistance zone. As in the above overnight ES daily chart, I saw that ES broke the triangle formulation on last week and now backtesting the lower trendline.
The best case is that the index pullback a little for one to two days to 1140 zone to form a higher low, then it can go further up. The first dip must be a buy. I will long it this time. My timing model also suggests a continuing rally after a small pullback. It should give me a long signal in next week.
In my chart, I see small cap is backtesting the broken trendline at 670 zone. I am shorting RUT by TZA before the close. The market may further go up tomorrow. I will add more if we can hit 117.30. I think a pullback should come.
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