The markets won the proverbial battle Friday, eking out a green finish, but lost the war, shedding over 6% on the week. Leading the way down was the commodity space which suffered from crash-like symptoms throughout the week, capping it Friday. Copper lost 15% on the week, silver lost an astounding 20%, and gold nearly 10%. We can’t help but be reminded of 2008 when we see action like. Remember, it was then that the dollar shot higher and commodities fell broadly as global economic demand weakened.
The only positive we see out there is that SPX was once again able to defend the 1,120 level. While it has pierced this level on numerous occasions, it has still avoided a close below it. Until we get that close below 1,120 bulls are still hanging by a thread, but as we have stated in many of our commentaries, we truly believe it is only a matter of time before we crash through it and test 1,100.
Even though we still hold that belief, we are open to the idea of a short term bounce for the markets. There is a bearish gap down on SPX from 1,166 to the high of yesterday around 1,143 so it is possible that the index will do some refilling up to the base of that gap. Therefore we now have resistance between 1,150 – 1,170 on SPX while support remains at 1,120. Yesterday’s low of 1,114 becomes a key level to watch moving forward as many remaining bulls are likely to throw in the towel on a breakdown beneath that level. Let’s see what next week brings, have a great weekend all
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