Unbelievable. Yesterday things looked as bullish as you could get with few red flags sticking up, but today it is all for naught. Europe finally got the best of this market with Italian yields shooting up to 7.5%, a rise of over 6% from the previous session. The scary part about this level is the 7% level is the yield at which Greece and Ireland sought bailouts. The problem with this is that Italy is the 3rd largest economy in Europe, so the ESFS (the fund that was set up to bailout Greece) is not big enough to hand the collapse of a country like Italy.
So just like yesterday we had lots of bullish happenings, today we had just the opposite. Among the bearish technical events was the huge breakout in the U.S. dollar, which surged over 1.5% and above key resistance at $77.50. On the flip side of that, the Euro tanked to levels not seen since early October, declining over 2% to 1.3552. Most significant though in our opinion was the breakdown below 1,238 on the S&P500. This level held on more than one occasion during the last pullback. The breakdown below 1,238 now brings 1,215 back into focus.
If today’s lows don’t hold then 1,215 may be retested. In retrospect though the market is still above 1,200 which is the key because 1,200-1,1230 was previous resistance during the channel that was established from August thru mid October. But if SPX were to fall back below 1,200 alot of bulls would likely be disheartened and we could see intense short selling. Below 1,200 there is not a whole lot of support between there and the 1,074 low set on October 4th so retesting the yearly lows cannot yet be ruled out of the question.
Did you know that you can watch Stockhaven trade live in real time?
Learn how to daytrade by watching someone else trade! Watchhimtrade.com is the only site that lets you look over the shoulder of a professional daytrader.
Watch this video now where he shows you how it’s possible to make 100% in just 5 minutes!