fallling 100+ points in 2 days, the S&P is now now in the middle of nowhere. I would not iniate new shorts and by no means try to catch a falling knife.
sharp reversal from the top of the channel brought price down to the support area, and more, opening with almost a 20+ point gap on the S&P500. The market is currently is very oversold, but can also remain oversold for quite some time. Price is currently resting at 112.90 level on the SPY. However, I would not be keen to iniatiate a new short or long position at these levels, by no means.
Where are we at? damage has definetly been done. For the market to get back on its feet, it needs to fill a 20+ point gap and STILL need to push further. Market has swithced back again to headline risk, where any announcements can spark a (short?) cover rally in heavily oversold enviroment. Thus, I have marked some fibonacci levels to take into account on a shorter timeframe basis.
(Not, i should say) concidentally, the 1120 area is marked by the 50% fibonacci retracement from the march 2009 lows to april 2011 highs. This should be a strong line in the sand for a possible rebound. If not, the 1080 level seems like another are to watch.
At last, another important signal that I closely following is copper, in this case represented by the ETF JJC. It is widely accepted among many people I respect that Dr. Copper tends to lead the market. So far, copper has not shown signs of reversal and it remains in a downtrend.