Tuesday, February 22, 2011

Stocks Fall - Tomorrow Will Be Very Important

Above is a daily chart of the S&P 500 over the past 6 months and as you can see  the stock market has enjoyed a spectacular rally off of the September 2010 low.  As you know I've been bullish on the market since last fall based on the 4 year cyclical low which was due in the fourth quater of 2010.

Today stocks were under heavy selling pressure as tension in the middle east builds. The S&P had one of its largest down days over the past 6 months.  The last time we had a similar down day on heavy volume was towards the end of January. That day turned out to be a one day event as the market quickly rebounded to new highs.  That is why I feel tomorrow will be a key day in determining which way stocks will move over the next few weeks.  If the bulls are going to support this market, they need to do so tomorrow just like they did at the end of January. If the bears continue with their selling,  the 6 month trend line (shown on chart) will be vulnerable to being broken and if that happens, the short term trend will turn to down. Lets see what happens!

1 comment:

Anonymous said...

I think we are in a different situation right now as previous weekly low is taken. selloff in january unable to made new weekly low so from this point trend is broken ...is it correction or anything bigger time will tell. http://trendroom.wordpress.com/2011/02/22/sp500-12-week-uptrend-is-broken/


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