Falling Wedge

The falling wedge that is forming since this drop in the markets began is showing more and more bullish signs in my opinion. We ran up on Wednesday back to nearly test the downtrending resistance line pictured. I would expect the market to retrace a bit Thursday possibly. I would be selling into the 882 level and 895 level if we get there. There is a gap overhead from Monday that could fill if we continue to run up but I tend to think we will see a half attempt at a gap fill and thus I would watch for heavy resistance around the low 880s.

The retracement on Monday was exactly textbook if you the Fibonacci's as this was almost a perfect 50% retrace of last weeks big rally. The area at 820ish on the SPX was retested Tuesday and held and today we closed over 870. That's a textbook retracement that honestly we have not seen in this bear market in a while.

This latest market move to the upside feels a little different to me this time. Lots of positive reaction in the market after bad news and that is bullish action. The price action foretells where the market wants to go. You have to take notice and repsect that when it occurs. I think eventually this market is poised to breakout to the upside out of this falling wedge pattern and thats when you will probably see a hell of a rally. The area to watch to the upside is 900-915. I believe we can move up to 1000 SPX believe it or not when this market pops creating a massive short squeeze. It may happen next week or next month but the odds are coming together and building towards a possible rally coming in the markets. However, we really gotta hold the 820 level and 800 below that to convince me that the sellers have dried up.