Option Investor
Update
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Tomorrow morning we have the jobs number and I have no idea how the market will react around that report. The way the price pattern is setting up here I would say if we get a gap up on the news (or for whatever reason) it should be a good shorting opportunity. How big of a pullback we'd get I don't know. We could get a just a pullback to this afternoon's low and then press higher again (pink wave count on the 60-min chart). The risk for the bulls is that we could start a much larger decline.

As noted on the chart, there is a confluence of trend lines at SPX 848--the downtrend line from November-January, the broken uptrend line from March and the trend line along recent highs since March 23rd. Not shown on the chart is a Fib projection up form the March 30th low where it would equal 127% of the previous leg down (March 26th to March 30th) at 847.44. These often mark reversal levels and it coincides with the trend line intersection near 848. With markets overbought on all time frames now, and showing some bearish divergences, that's why a gap up tomorrow morning would likely be an exhaustion gap and I would look to short it. The other possibility is a gap down which I would not look to buy.

SPX 60-min chart:
[Image 1]

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