recent trading actions leaving the S&P in what looks to us like an orderly high level consolidation of the December recovery rally. The fact that S&P managed to hold on to most of its gains was pretty encouraging. Over the next few days, it will be important to monitor the rally and retreat behaviors as the 2600-2633 zone is tested as resistance. We’d turn particular bullish if S&P hurdle and sustain above 2633
while S&P’s 2600 continues to act as price magnet, market internal does not appear strong enough to generate sustain breakouts. As for strategy, traders should consider taking profits into short-term rallies
divergence starts showing up in the Money Flow measure as the S&P tested formidable supports. Typically, this is a sign that the selloff may be mature and stocks are, therefore, at risk to a short-term rebound. Near-term, there is a high probability of rapid rallies and retreats between 2530 and 2600. Short-term traders can play the range but the market is volatile and tight stops are advisable
S&P shifted to consolidation mode. The index could signal an extended downward trajectory, depending on how it closes over the next few days. For now, 2600 is the line in the sand. We’d turn particular bearish if the index closes twice below that level. With that said, if that support gives way, the next leg is likely lower, and we’re looking at 2530.