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The trading range in last 3 days has been quite huge. That tells me that a big move is coming. The nature of the move in the last 2 hours clearly smells manipulation to me. It was big boys driving the market down to get in at cheap levels for the upcoming big move. I have spent last 2 hours looking at charts, news and blogs and here is what I see. (Btw, my conclusion is market goes up here... may be touch SPY = 90 by end of March)
Arguments to make a bullish case:
- The dip from HOD to LOD in the last 2 hours today was a 23.2% retracement of the move from the March lows to today’s highs on SPY. Given the strong bullish nature of the move up, one can argue that this is all the retracement we get.
- After coming straight up from 666, the indices have held steady in a decent sized trading range. This is good for bulls, bad for bears. More time spent in this region without going down will get rid of the overbought conditions.
- The pattern on the weekly charts is very scarily ominous for bears. The weekly oscillators are flashing a very strong buy signal on SPY, IWM and SPY.
- End of the month, end of the quarter window dressing. 4 more trading days remain in the quarter – we could have a push towards SPY = 90 (which is where the quarter started) by the money managers to post positive numbers for the quarter.
- UBS report from earlier in the day (posted on SOH) said that this rally was started by retail and then the institutions have jumped in.
- The move down today might be similar to the move down in Gold on the morning of Fed announcement. Probably folks know that the numbers tomorrow morning are good, and hence the market was dipped to get in at cheap prices….. It as a decent sized move down from the highs of the day.
Arguments to make a bearish case:
- We are up almost 25% from 666 in little over 2 weeks without any major retracement.
- The daily charts are overbought with CCI rolling over.
- The unemployment data coming out on Thursday can’t be good amidst recessionary economy |
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