Wednesday, January 28, 2009

01.28.09 - Ten Day Highs on the Gap

We are at ten-day S&P 500 highs after this morning's +2.2% gap higher [SPY], ostensibly on 'bad bank' and stimulus plan news. This puts us prospectively within overbought territory with an RSI-2 of 95+ just under the fifty-day moving average. The 50-DMA coincides with today's second floor trader resistance level of about $86.90, and these are proving difficult for the market to overcome at the mid-day in spite of an exceedingly strong cumulative tick and VIX readings under 40 at the open.

Lastly, don't forget we are getting an FOMC policy statement today at 2:15pm EST. Zero interest rate or not, traders will be looking closely at that text. Reading:

o Quantifiable Edges - Gap Closure Study

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