The roller coaster ride continues as SPX projects to give back a good chunk of its reversal gain yesterday. The weekly chart shows the status of the projected open back below a resistance area that it tried to take back yesterday. While market corrections tend to be faster and more violent than rallies, which often grind upward, they don’t just end conveniently when casino patrons’ nerves can take no more. They go beyond that. They get right into the gut.
SPX daily shows a take back of the top of the 2018-2019 pattern surrounding the Christmas Eve massacre (green arrow) that is would-be support. ‘Would-be’ because as of now it isn’t. It’s an attempt, and that attempt is being tested hard in pre-market. Is that capitulation volume? It is sure getting there but again, these events play out when they play out and not necessarily when players’ guts feel it is time.
A hold here could see a process of filling some upside gaps, with the most extreme way up near 3350. More likely, the gap at 3000 lays in wait just below the resistance of the SMA 200. A failure here opens up the Christmas Eve 2018 lows for a test in the 2350 to 2500 range.