Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
After two 90% down days on huge volume last week, a move through current levels would be a complete egg on face moment for the bear case. We have now come to expect the low volume “V shaped” moves since 2009 and right now we might be in yet another one. After stalling yesterday at a 38.2% retrace of the selloff, once that was bested stocks quickly moved up and with this morning’s gap up are at the 61.8% retrace in a matter of 24 hours. This is roughly S&P 1574. The chart below is crowded but this also fits in very nicely with the major long term trendline that the S&P 500 has been riding since mid November – and finally broke a week and a half ago.
So if after a break of that trend line AND two 90% down days of major distribution this market simply shakes it all off and goes right back up as if nothing happens, you would certainly have some head shaking stuff. Very key level here with Apple reporting tonight. As a major NASDAQ component it most likely will rest on that stock’s shoulders.
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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
