Well the chopfest that was Jan ’15 is finally over and depending how you count ’em we had 2 zigs (rallies) and 3 zags (dips) on SPY. Each end of the tight range was met with strong volume support so there is an extreme game of tug of war being played with equally strong sides. Today was no exception as the signal was given for the oil hounds to cover their shorts and around 2:30 all hell broke loose. The market can’t seem to decide whether cheap oil is bad for the economy or good for the consumer.
The breaking of psychological support levels often makes it too scary to buy, but that’s often where the best buying opportunities are in retrospect. Is the 3rd shoulder ready to blow? The bulls do have time on their side (bears are always looking for quick moves), so if they can defend these levels until the unemployment numbers next week we could break to the upside, but if not… well there is still a gap from 10/21 that hasn’t been filled. -MD