Possible Bottom Forming

Yesterday, I tweeted saying that today would be a good day for a 400-point rally. Well, we got 322 points. I guess I should have done that three weeks ago.

In any event, the S&P 500 has formed some major bottom points recently. I’m not a technician, but I’ll pass this along to give you a sense of what traders are watching.

The S&P 500 has closed at very similar levels on a few days during the past two weeks. On August 8th, it closed at 1,119.46, then two days later it closed at 1,120.76. Last Friday, we closed at 1,123.53 and yesterday at 1,123.82. Not making a new low is the key event.

The story seems to be that the low bar is holding up. The bears have tried a few times to bring us lower but they haven’t been able to do it. This may give the bulls more confidence.

We’ve seen rallies like today before. In fact, it’s only the third-best day of the last eleven. But if we start seeing some real follow-through, which has been sorely lacking, the bulls may finally take back the stage.

Posted by on August 23rd, 2011 at 4:30 pm

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