Well, no bounce. With so many of the things I watch hitting oversold levels yesterday, we really should have bounced today but the market is apparently too weak and AAPL being down another $20 today isn’t helping.
On a closing basis, $SPX is now down 88pts from it’s closing high of 1465.77 on September 14t and I do believe there is a bit more downside to come before we have a chance of bottoming. Today many of the breadth indicators that we’re oversold yesterday have moved into neutral territory and will need another day of heavy selling to push them back into extreme oversold mode again. Could be sometime next week.
Did some Fibonacci retrace and extension work this afternoon trying to find what are known as confluence zones. A confluence zone is the area where two types of Fibonacci numbers come together.
The next important confluence zone for $SPX runs from 1370 to 1363. 1370 is the 50% retrace from the June lows and the September swing high and 1363 is the 1:1 extension using the September swing high then the swing low from October 26th and then the swing high from November 2nd. This is also right where the next level of support is on $SPX.
If the above area does not hold, then the next confluence zone runs from 1346 to 1335.
And if that area doesn’t hold, then the next confluence zone runs from 1319 to 1311.
If none of the above areas hold, then we are probably headed back to the June lows and/or lower.
The 5,3,3 Sto needs about 2-3 more days before it gets so oversold that it ought to produce a bounce of some type and at the same time the RSI 14 is now at 32 and it too will need a few more days of downside before it hits the oversold level of 30. When markets do bounce, then it will be the quality of that bounce that will determine what happens afterwards. I do believe that any bounce will be sold into so I don’t think any bounce that does materialize will last for long.
So be careful.