Rising Wedge Break?

After the rising wedge pictured was broken on Monday the market retraced about half of the losses bringing us back to the tough 850 resistance level. The action was impressive on a intraday timeframe as the banks and tech led the rally. The textbook play on a retrace of the down day like we saw today says to sell the retracement back into resistance because its a dead cat bounce. I tend to think we could see a further pullback into the 800 area as well. We have plenty of moving average support just underneath here too so you can't forget that the market might just consolidate and buy time before the next push up. Tough to say what will be the outcome.

If the market does decide to pullback further then keep in mind that 800 is solid support and buyers could emerge there. Also, I have drawn in a fib retracement from the lows to the highs of the recent rally and the 50% retrace comes in around 768. This level should be the line in the sand to determine if the rally we have seen is for real. If price pulls back all the way down there then thats where the bulls will make a stand if they still believe.

For Wednesday, I want to be neutral and see where the market trades to determine my intraday bias. The pivot is at 839.75 so that will likely be a good area to see if the buyers support it or not. Below that area and I would be expecting the market to retrace back a bit more into the lower 800s on the SPX. Trade safe.