Tuesday March 1, 2016
Key Developments :
- Gap and Go
- S&P tags 61.8 Fib from 12/29/2016 Swing High
If you haven’t had a chance to read my “Letter to Friends and Family” from the weekend, you might want to check it out. Gives you a view of how I am thinking longer term.
As for the more tactical daily approach:
After yesterday’s close on the lows, Surprise mother fuckers! Bears got squeezed hard. I went out flat yesterday due to low conviction in either direction and the thought that this was 10/15/2015 all over again.
That thought proved to be right. Closed right on the 8DMA, on the lows and then gap and go. See below.
This morning I tweeted out that I would watch how this either H&S above trend or pennant would play out and I got long right into the breakout. I know that had to squeeze short thinking they had a right shoulder.
Once it broke it never looked back. There was enough time in the morning to get into this trade with a comfortable stop loss and not chase. That is always nice especially when it runs like it did. You would think we would get some follow through on this move tomorrow, so I left a tiny long trade on. Although there is no reversal pattern, we tagged the 61.8 fib, so there is resistance risk that we could get a small pullback in the morning.
We should not that breadth seems to be expanding as it took out the November highs. That will be an interesting thing to watch going forward.
Also, so far…RSI is making new highs with price. So no diveregence as of yet.
The Bottom Line:
Using the first of the month money flows the bulls and the squeezed shorts ripped the market higher. We reached the 61.8 Fib today into the close so some consolidation or pullback from here is not out of the question. I continue to believe we have a bit more upside based on my letter from the weekend, but that the lows of 2016 are not in. As always, I will change my mind as the price action presents itself.
BELOW ARE SOME SECTORS APPROACHING 61.8 Fib replacements.