Next Target for SPY

When we forecast the (possible) directions of a stock, index, etc, we do it based on certain assumptions. When that assumptions are proven wrong, we have to be flexible enough to change our views of the market.

Last Tuesday (about 8pm SG time) handholding session, I updated the group that, provided that the 29 Jan 2010 Low is not broken, I am expecting the major indices to experience a very short rally of at least a 50% Fibonacci retracement from the Jan 2010 Low to Jan 2010 High. Thereafter, provided that the Jan 2010 High is not broken, the market will then continue with its down trend breaking the Jan 2010 Low. If the current short rally broke the Jan 2010 High, then the assumption that the market is heading downward do not hold water anymore.

For SPY (S&P500 ETF), one can then expect it to move up to at least the 50% Fibonacci retracement (around 114.14) before contunuing with its downtrend breaking the Jan 2010 Low.

What does it mean then to me? I would short the market again when the market is closer to the Jan 2010 High.

Cheers !

PersianCat (Millionaire-in-progress)