Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
The thinking here is a lot has changed since 2:30 PM Thursday. A lot of bearish issues have popped up, not the least is price, but as noted yesterday we had some negative technical conditions arise on longer term time frames. Of course many of the most vicious rallies happen within downtrends and with the cavalry set to arrive (already they have rolled out Fed member James Bullard and David Tepper this morning) to constantly support the market, it won’t be an easy ride on either side. These corrective periods are notoriously tricky with violent action both up and down, much of it coming in the overnight session with little rhyme or reason from day to day. There is also the quarter end approaching with many believing institutions will try to ‘mark up’ things. We shall see how things go but finding quality individual charts after the action the past 2 days will now be very difficult. So the best thing will be a cleansing and reset.. we will soon find out if that is “allowed” in the QE environment.
If you are a Fibonacci fan here is the SP 500 chart with the entire November-May rally displayed. You can see the 23.6% area was a hard fought area where the bulls put in a stand for a few weeks but that dissolved yesterday. Next is the more typical 38.2% retrace down in the 1550s.
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