Hell of a week, eh folks? Being patient with this range the past month has been challenging, but we knew that sooner or later it would eventually break.
I was fairly doubtful that we would break to the upside, but I learned my lesson in the first quarter of this year, that no matter how bad things look or feel, you have to HAVE TO wait for a support level to break before getting committed to the downside.
For me, SPX 1325 was that level to watch. I closed a few shorts that day as a precaution, after all, I could always get short again if the level broke. Now that we have in fact broken upwards, it appears my observation last month is still in play.
To summarize, I was expecting a 50-61.2% retracement (small blue box) followed by a return to the Mar/April highs. You can read it here if you want a reminder.
I will finish with an overview of some key markets:
There exists the possibility that bonds could create a double top from this extremely low yield area. For now, my initial target will be the previous low's support. If that breaks, we could be in for a hell of a rally despite the many arguments against it.
The hardest skill for me to learn has been to trade what I see the market doing and not what I feel it should do. I can't think of any good reason why this market has anywhere positive to go, but for now, the charts say to bet on the dips being bought so plan accordingly.
Best to your trading next week everyone.
