S&P 500 - March 31, 2009

charts courtesy of stockcharts.com

Short-term counter move fizzles into the close.

Index rallied from the start, but fell shy of filling the gap, and sold rather hard into the close


Seems like an ongoing a-b-c so far. It may morph into something else. The important question is how much the index gives back, in other words, how deeply it corrects.

As we can see from the 15-minute chart above, the correction has not even reached the 32% Fib level, yet. The bounce today packed a lot of momentum on the 15-minute frame.

I don’t think the pullback is over yet. In fact, as I am writing this, the futures have dropped some more

For the day, breadth was positive

Volume increased a bit but was not that impressive. In fact, a good portion of the volume was due to the late hours selling

Not much has changed. The weight of the evidence is still on the bullish side. And it is up to them to prove that this was not just another well orchestrated short squeeze. The highly anticipated G-20 circus may cause some volatilty in days ahead.

There is an area that everybody seems to be watching, I have highlighted that area on the daily chart above.

In my opinion, a market speculator should always be wary of general consensus. Remember how so many bears suspected the rally because VIX had not spiked? Because they had not seen their capitulation? Because CPC was giving them low readings? They may yet be proven right with their thesis in the end, but how many of them did actually survive the squeeze along a 150-point rally?

Markets usually do what we expect them to do, but not necessarily when we expect them.

I am not saying that a widely accepted view will not succeed, just that one should be aware that it is a view held by many, and that the market has a way of being less than hospitable to the majority

Support is at 789, and 768, with 768 being 50% retracement and a widely watched level. Resistance at 817 (top of the gap) and 848.

Short term trend is down, and, as long as we get lower highs and lower lows, will stay down. Mid-term and long term trends are down.