Today: Snap Back Rally Or Bearish Consolidation
The markets are experiencing a bounce back from the sharp drop yesterday. After falling $2.00 yesterday, the SPDR S&P 500 ETF (NYSEARCA:SPY) is trading at $135.65, +0.98 (+0.73%). Wall Street is looking at this bounce and wondering if it is a snap back rally that will lead to new highs or just technical bounce, prior to more selling.
The proof is purely in the charts. After the biggest drop of 2012, any trading higher but under the recent 52 week highs must be viewed as bearish consolidation. If at any point the recent market highs are eclipsed, any trace of the bear would be gone.
In going by the numbers, the markets can float up to $138.19. As long as they do not take that level out, a technician would view this as inside consolidation and an in-spirit-of bear flag. If $138.19 is taken out, all bear cases are off the table.