By John Pisanchik

Well we had a rally from the lows of last week and I issue a caution to it. Do not get sucked into market strength that can quickly dissipate. Here is why I am so cautious. The rally that we have just seen hit an important Fibonacci retracement at the 1108 to 1110 level. In addition to that, there is resistance coming in at those levels from the 50 moving average and the 1100 level overall is an important level to hold. In order for this to be a “real” rally, the market needs to continue higher immediately and without hesitation. If it stalls here, then the likely hood is that the next leg downward will begin sson. There are a lot of cross currents here and expect lots of volatility over the next few days. Do not put too much emphasis on the individual days, but instead look at what is going on over several days. Time will always smooth out volatility in that a trend is a trend. If the market stalls here, and you have not hedged yourself, take advantage of this temporary strength to put on a hedge. Happy Trading.

Filed under: Market Opinions

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