Stocks suffered their fourth consecutive losing week last week but gave great signs of life in a Thursday-Friday bounce. The good news about four straight down weeks is the lack of probability of a fifth consecutive losing week, very rare. Given the constructive bounce we saw in the latter half of the week, along with the plethora of support buys setting up in leading stocks leads me to believe we'll bounce this week.
The 11% controlled pullback in the S&P has given a falling hourly wedge (second chart down) where we will get plenty of information regarding whether or not we bounce this week. The crucial area for the SPY is this 330-332 resistance area, if we see some heavy buying in that area, that could be the start of a bounce. If we see stocks give a major failure in that area, it could all be a fake-out move before we head back lower once again. Have to take all scenarios into account.
News-wise, the market really wants to see some fiscal stimulus out of the government. That could be the catalyst the market needs to hear to get back in the uptrend, so we have to watch how things develop there this week.
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