After looking at many hundred charts again today, I have a couple of comments on the few down trend breaks that
occured last
friday. First, I just want to mention that I took a fairly large index put position at the close in anticipation of a lower close either on Monday or Tuesday. Now, looking at the (
SPY) you can see that it clearly broke above a
descending trendline. What we have to watch for now is that it's bumping up
again fairly strong resistance at its Fib fan level in blue. Additionally, we have had three very strong up days and I would guess that most investors are going to at least take some profits here shortly. What we need to look for is for the (SPY) to successfully re-trace back to its Fib
retracement level and then keep raising.
Oil has a great day last week to start off the year. As you can see (which almost looks identical to the (SPY) chart), (
OIH) has broken its downtrend resistance level. Still, we are right up at both the Fib fan level and the 50-day moving average. If we hold this level we can look to go long here with stops around $71-72. I personally think oil is still due for a very nice rebound given that the dollar has gotten so weak recently...
As always, please check back tomorrow for more updates and trading ideas. The
Forex markets should be interesting tomorrow when they open as we really kick off the new year! Happy Trading!
