Friday, January 16, 2009

Gap Fill and More

Pretty interesting wild day in the markets on Friday. After gapping higher nicely up to the 856 level, as I said would happen yesterday we filled the gap like textbook and even sold off further past the pivot at 834. I was pretty bearish on this and took some short ES trades in the morning.

Midday was a choppy time and the market found its footing after hitting lows around 826. This 826 support was the area I mentioned in yesterday's post that would be very bearish if we broke. We did not. We rallied hard into the close and finished near 850. There was a few very nice long ambush trades in the rally higher.

Gold had a monster up day but I would continue to be bearish on gold until it broke 900. Oil is looking like it wants to bounce once they roll over the new contract next week. The dollar rallied nice this week but pulled back a bit Friday. Overall, the commodity markets caught a bid Friday.

Next week should be fun to watch as I think we have hit a crucial area. The low yesterday marked roughly a 61.8% retracement from the Nov-Jan rally. We bounced sharply off that level and so if we grind higher I think we could be in for a much higher move in the coming week and months. Have a nice weekend.

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