Sat 23 Jan 2010
In case anyone isn’t aware of the percentages, the last two days wiped out (and then some) all the gains so far in 2010.
While the S&P has only dropped 5%, it has happened in only 3 days.
I’m positioned for a bounce Monday morning, the three day drop is “too far too fast”. But I don’t expect a bounce to last.
And I consider this the warning shot that good times are over. If there is a bounce, it will likely be short lived. Then we can expect to see lower highs and lower lows… basically a return to a bear market.
When I make observations like this, I like to identify what would indicate that my analysis was incorrect. In this case, if the S&P is able to crawl back above 1150… especially if it is able to do so on higher volume.
Side Note: It’s worth commenting that 1150 was just a hair over a 50% retracement from 1576 all the way down to 666 (the 50% level was actually 1121).