Monday February 1, 2016
Key Developments :
- Down gap bought and SPX completes a 50% retrace
- Bullish Inverse H&S patterns see minor follow thorough
Today’s gap down to open February was bought in the first half hour. In fact it was bought right at the pre-market low on the SPY. We should keep these levels in mind because as we can see the first intraday support came in just below the pre-market low; while the first resistance, just above the pre-market high.
The rest of the day the market kind of chopped around with the typical bull market 1:30 – 3:45ish rally and then profit taking into the close.
It was sort of a choppy grind higher as the market attempted to digest the big move from Friday. However, with the backdrop of the inverse H&S patterns targeting 1967.41, and no reversal patterns in sight, it is best to trade on the long side and buy dips until either the targets are acquired or a major reversal pattern presents itself. It has not yet.
It is possible we get further consolidation with the 50% retrace having been acquired, but we still have a bullish pattern in motion, so we must respect that until we have price action that threatens the breakout from Friday.
The Bottom Line:
The bulls did a nice job so far protecting most of Friday’s gains. We still have bullish patterns in motion targeting higher prices. We must watch for any reversal patterns or further follow through on this bounce to acquire the first upside target at 1967.41.