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Market Comments for March 25, 2015

 

Yesterday the market opened flat and after trading lower to test the key support area at “2”, it rallied strong all the way to test the prior days high at “1”. It consolidated tight at the high of the day going into lunch but then began a downtrend that took the market all the way below the low the day and below the key support area at “2”. The SPY was the same.

Yesterday the market did something significant it is not done in a few days; it broke its uptrend on the hourly chart. With daily charts at prior highs this increases the possibility of a more severe pull back from these areas. This is something we discussed yesterday, the fact that there is no real way to know in this particular pattern how far the market may pullback. Anything from a stall for one day at the prior highs to pulling all the way back to daily support at “3” is possible. The good thing about the hourly chart breaking down is that it’s can become an excellent gauge. When the hourly chart breaks its downtrend, or more importantly, resumes its uptrend, it may be an excellent indication that the daily chart is ready to resume its daily stage II. There is no intraday support area, and there will be resistance anywhere between “2” and “1”.