As I wrote yesterday, I'm not a believer in the mystics of Fibonacci lines, so it figures that the first time I ever highlight such things on my blog, the presumed Fib support gets busted the next day. We now have the S&P 500 in triple digits for the first time since 2003. Wave 3-of-3 is living up to reputation by ignoring all signs of oversold extension and getting ever more extended. Still, I have to believe we're going to bounce here soon. Unless, WWIII is about to break out, the market just can't keep falling 10% a week.
I have a theory that price tends to gravitate toward major pivot points. It's not actually my own, but rather one of the many pointers I picked up from the original Market Wizards book. Let's have a look at a long term chart of the S&P 500.
When we do see a bounce, it's going to be majestic... 10-15% in a very short period of time (heck, we were 15% higher 4 days ago), and I'm guessing it will come off 950 or thereabouts. I may take a stab at the long side if the market is accomodating. A final panic drop tomorrow morning with a massive intraday reversal would be ideal. However, I'm more interested in reloading shorts after a rally.