Just as I was sure that the floor had dropped out, strength emerged as the S&P 500 closed on highs for the session.
Once again, I think this is a great example of using bad news to create a buying opportunity for the professionals. Here, we are seeing prices driven down by bearish news only to finish on the highs on increased volume. How could everyone be selling if the market closes on highs?
With February upon us, we have to wonder how much farther the market will fall. The S&P 500 is right at the trend line support levels and the MACD is reaching extreme, negative levels.
As traders get back into the swing of things, the markets make a big move higher, the S&P 500 finishing up over 2.5%.
Looking further at the price action, we can see that a nice breakout has taken place. Unfortunately for bulls, prices failed to close above the 200MA (on a weekly time-frame). It has been quite a long time since the S&P, and markets in general, have seen the 200MA. The last couple of times the S&P has met the 200MA, it has acted as a point of support and resistance.
