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Turnaround or Breakdown Coming in the Markets?
Posted on July 1, 2010 by Chuck Kowalski
The markets were able to rebound on Thursday, even though the technical picture is very negative. The market put in somewhat of a spike bottom and it may try to test resistance around 1035-1040.
The market has been notorious for breaking a major support level and then rebounding very quickly. These types of setups have marked several bottoms in the last year and a half. I keep that in the back of my mind, but the dynamics have changed. The market is negative and in a downtrend. The mode has shifted from buy opportunities to sell opportunities.
It is even more negative that the Nasdaq also made new lows and broke support levels. In the past, divergence in these two markets not breaking support lead to some strong rallies. Actually, the only good thing to say about the market right now is that it is very oversold. We should eventually see a bounce, but it may not last long.
The jobs report could determine the fate of the market in the near term. A move back above resistance and confirmation of a spike bottom should attract some decent buying. If that does not materialize, the markets should be headed much lower.
Filed Under: E-mini Stock Futures