I went from feeling a little silly with the SPX 1950-1960 bounce target hanging out there (just asking to be mocked as the market dropped again on Thursday) to now seeing it as a near sure thing. This morning’s pre-market activity puts it at around 1940. What is 20 measly additional points to a stress relieved bull?
It would be a good idea to watch the RUT (and its bear flag) for early indicators. RUT spent last week grinding upward in the flag in a precursor to the broad market bounce to end the week, but it remains in a relatively vulnerable position if it remains below its MA 200.
Individual investors, newsletter writers and professional money managers all got very bearish (too bearish) with the routine hit that the markets took. This is now being adjusted. At 1960 SPX would offer resistance at the MA 50, the middle Bollinger line and a lateral cluster of traffic. To put a bear case back on we need to see a little bull bravado return to the scene.
With the bulls becoming emboldened, I am taking a loss on the RUT short and waiting out the bounce objectives.
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