S&P has been pulling back towards 1700 as we expected from our posts that were uploaded after the ‘Bernanke’ blow off spike to 1731. We mentioned in previous posts that we don’t think it is wise to be bullish at current levels and that we would not participate in any upward move using ‘Bernanke’s’ comments as fuel. After the upward spike to 1731 prices are pulling back and closed last week near 1709. We are still bearish but an upward bounce towards 1720 is not out of the question. Basically our most probable scenario sees prices bounce upwards a bit towards 1720 and then continue downwards towards 1690 where the 38% Fibonacci retracement is.
We noted last week through our twitter account that prices have reached the upper boundaries of the upward sloping channel and that a reversal was very possible and bulls should have raised their stops. Currently prices are testing the 1700-1704 support and I believe that this could justify a small upward bounce before coming downwards again to break support and move towards our Fibonacci target.
Concluding, we remain bearish with 1690 as our target. This of course could develop into something bigger but we first focus on the short-term target. More detailed analysis and a view of my trades in real-time can be obtained if you become a subscriber.
As always, thank you for taking the time to catch up on my thinking.