Friday, October 30, 2009

10.30.09 - Third Back-to-Back Trend Day

Our third trend day in a row just put in new lows for this extended cycle.  Of note, this was the first post-reversal day that hasn't featured a higher-high in some time.  It would appear the psychology today was not to let yesterday's gains be lost into month end; I know my finger was on the sell button all morning.  In any event, the directional momentum remains clear and has only been magnified on this action.

With the fifty-day moving average and uptrend channel support breached, it becomes easy to now imagine a retest of the 200-day exponential moving average below.  For the SPY, that's all the way down at $99, or another 5% below.  On the other hand, this down-cycle has run for some time now, and this could still be just one more overshoot ala October 2nd (although I'm doubting that).  Given directional volatility back on the rise, traders will just have to take it day-by-day, as usual.

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