We’re hitting a lot of the basic retracement levels we’d expect to see in a bear market rally. Here are the big resistance levels and points bear setups fail:
In a bear trend we can expect to see rallies as deep as 76% retracement and when we get into this zone is usually where we have a big decision point.
SPX is currently about 10 points below this but both RUT and Nasdaq are at their 76.
RUT with some reaction to it and Nasdaq just hitting.
The rallies so far have fit inside of common things we see in big two leg corrections in a downtrend. If we do make a high here, the implied downside moves can be really big. In a full continuation pattern of the downtrend here, we’d be looking at a short target of around 4725 for SPX. That’s under previous highs.
Here’s some specifics on how we can make trade plans for such a move and when we know to stop betting on it (And probably reverse).
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