Well the rebound is flattening out ever so slightly. So slightly. I said that I thought the SPX might come back no higher than 1250, right now it is just tickling 12,000 with the stochastic in mid range making it conceivable that the index could go all the way back to 1250. But what I want to know is what it does after that.
Most likely what will happen is that the prices will go up to some place under 1250, but probably not that high. Then they will fall off again as short covering dries up most likely all the way back down to about 1100. That will be the decision point. That's when we will see if the bottom is in or if the route will continue.
I not only stand by that statement but I hope for it. That is I hope that the SPX comes back down to the 1100 area and then rebounds. If it does that then we might guess that it is forming a double bottom. Of course the double bottom of the confirmed probably for at least a week but it could be a very obvious buy signal.
Right now the next obvious set up will be when the stochastic gets up into the overbought region and turnes back down. If that happens at prior support of 1250 then I would consider making a risky short of this index. But the safer thing to do is wait for retracement back down to the 1100 area. A strong bounce off of there be a clear buy signal.
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