Technically damage could have been done today.
Here is a quote from John Murphy himself in his Book Technical Analysis of the Financial Markets. (which is a must for anyone wanting to trade T.A)
"When a support or resistance level is penetrated by a significant amount, they reverse their role and become the opposite"
So if this is the case, the market broke through significant resistance today.
Case#1- XLF
XLF broke out through its 8.66 resistance today and on significant volume. Additionally XLF also closed above its 50MA. Together these make a case that resistance is broken and that 8.66 is the new support.
Case #2- SPY
SPY broke out of its resistance level 4 days ago and today broke out of its downward trend channel, with significant volume. Could this be signaling that the downtrend is broken?
Here are two items I am looking to go long on as well. Now that the fed will be flooding our market with 0% intrest rates and buying Treasuries. The dollar should be taking a hit and we should see a rise in commodities and oil.
DBC- Is a buy around the red line and your stop is below the double bottom that was formed. But watch if it breaks below that trendline with some force, wait till it hits the double bottom to buy.
USO- of course the black gold. It looks like USO wants to run and it should. Long term China will recover before the U.S and other countries will increase the demand for oil, combine this with a weaker dollar. Oil can make a run.
There is a lot of mixed signals out there. I am all in cash expect a small SSO short for a short-term trade. I will be mostly watching to see if we move higher or if we test those new "support" and to see if they are actually new support levels or was this move a fake out.
