1. AB=CD- This is the pattern mentioned yesterday which could bring us down 600. This is the blue line. If this pattern happens perfectly, it would be like a 16 seed beating a 1 seed. I still see support levels that the market can bounce off before it gets to 600. If those level fail this will be the likely scenario.
2.Brown Line- The bulls will defend 750. They have too or the market can easily move to 666-667. The first move down to this level should be defended easily. The bears will then defend the 785-800 Level. Then move the market down to 750 again which, will break the bulls and cause the market to move to to 667. Also the 50MA should come into play as resistance for this scenario.
3. Pink Line- This is the bullish scenario. It's a combo of the brown scenario but the bulls defend the 750 for a second time and if the market moves to 800 again. The 3rd time should be the charm and they are able to break through it. At this point, 800 now becomes support and this should be the start of a long bull run. Like the brown scenario the 50MA will also either become resistance or support for this scenario.
Short-Term the market is overbought and will pull back. The question is how far. Will 750 be support, or will 667 be support. Or does the market move down to new lows. Also it is possible the market chops around these levels. If this happens don't let the chop kill your capital.Long-Term the trend is down, but looking at the weekly chart. The market has the momentum to rally. I wouldn't be surprised to be range bound for a while similar to
Here is a link to the S&P Top 10 stocks. Most look over bought but have broken through resistance or are a few points away from support.
My plan is to watch the price action at those key levels mentioned. Keeping an eye on XLF to see if it moves down.
Come back tomorrow for my WEEKLY FADE ME LIST.
