Markets are driven by three factors - fundamentals, technicals, and emotion. I think an argument can be made to short the S&P in all three cases. As I finish my nightly analysis of my positions and setups, I leave you with this daily chart of the S&P over the last 2 years. Note the intraday high of 1576 on 10/11/2007 and the intraday low of 666 on 3/6/2009. Dragging a fib grid from top to bottom shows that on 8/4/2009 the S&P has retraced exactly 38.2%. This fact combined with the highest RSI level in the period spells "pullback time".
As you look at the chart, think of this quote:
"Bear markets print according to the same mechanics as individual stocks and futures. Look for a double bottom or Big W to signal the end of a major selloff." - Alan S. Farley (Author of Master Swing Trader)
Do you really think we are headed straight up from here?
Love to hear your thoughts!
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