Tuesday, January 20, 2009
What a bloodbath. The SPX lost some key support levels Tuesday that I believe were crucial to any chance of an extended rally. In my post last night I mentioned that if we held the lows of last week it should be bullish. Well scratch that. We blew right thru those lows of 812.75 without a problem. After the market close the ES futures hit a low of 797.50 and now are actually rallying higher to 814.
Which is where the daily pivot for Wednesday comes in. I have the daily pivot at 814.25. Should be interesting to see if we fail the pivot overnight. If we gap up--which would not be surprising after today's purely horrific day on a market internal standpoint--then I would watch for an ambush short to develop at 820.50. We are due for a snapback as the market really got overextended today. Not saying it lasts long if it comes though. We have monster resistance above us now with potential ambush shorts all the way up. If we fail at the 820.50 ambush short then I could see a target of 790.75 on this trade.
Remember as a trader you don't care where the price action is going. And I'm still of the opinion that we hold the November lows in this "leg down" but that could just be the voice of hope. Don't get caught up in the "news" or the numbers but rather focus on the signals the charts give you intraday and act on them. Mark Douglas said it best in his book "Trading in the Zone" when he said, "Have an unshakeable belief in uncertainty. Have rigid rules, but flexible expectations".