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SH @ the close 8/31/2011: Market have best streak since June but rally looks exhausted | Stock Haven | Stock Chat Room | Penny Stocks | Options |Stock Haven | Stock Chat Room | Penny Stocks | Options |

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SH @ the close 8/31/2011: Market have best streak since June but rally looks exhausted

So if bad news is good is good news bad? That seems to be the case as an initial pop on the back of better than expected data was used as a selling opportunity. Although the markets were able to put together their first 4 day winning streak since June, they finished well off the highs. Though the 4 day rally cannot be discounted, this month of August was the worst for stocks in 10 years.

With today’s high bears now have a clear level to get short against, 1,230 on the S&P500. We love situations like these where the market clearly gets turned away from a round number level because now we know where our risk is. From a short bias, the risk is that if SPX breaks above 1,230 it will set up for a test of 1,250 — a previous support level. After the rally we’ve seen though we think the market needs to do some back-testing of previous resistance to see if they can provide support. The main range we’ll be watching on SPX is 1,170 – 1,185 as this range acted as resistance last week so we’re interested to see if it can now become support.

 

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