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S & P 500 rallies sharply after big Monday gap-down Trading up against resistance zone Hourly chart in focus New to the markets, or simply looking for trader education? See our Trading Guides.
In Monday's piece, we had this to say about the gap-down open: 'As long as we don't see a ‘gap-n-trap' buy situation which erases a significant portion of today's losses and then some, we are looking to the area around 2300 as the near-term target. The gap-down buy was exactly what we saw, especially in the Nasdaq 100, which now sits in close proximity to a new record closing print.
The first two days of the week have brought a nice rebound, but was Monday the low, ending a correction? The overall trend is pointing upward, and dips, or corrections, should be relatively short-lived at least in terms of price (time corrections can take a while). But it seems a bit premature to say the market is in the all-clear just yet.
Looking at the short-term, the S & P is squared up against a trough created earlier in the month, and needs to clear above if it is to touch off the trend-line running down from the record high created on 3/1.
S & P 500: Daily
Created with TradingView
Pulling in closer to the hourly chart, a pullback from current levels and higher low could create a bullish inverse head-and-shoulders set-up. But this is only a scenario, however; given this week's gap-down and surge higher it would be reasonable to conclude that a higher low could develop and another thrust higher unfold thereafter. In this scenario, we would look for the top-side trend-line over 2370 as the next line of contention.
A drop below 2336 and it would become likely the Monday low will come under fire, and possibly worse. In summary, a pullback is the first expected move how the market reacts on any decline which may unfold very soon will be the tell moving forward. As they say ‘much can be learned in the retracement.'
S & P 500: Hourly
Created with TradingView
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---Written by Paul Robinson, Market Analyst
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