After Friday's rally in the face of horrible employment numbers, I am taking a closer look at long setups off of the lows. Before I get to individual stock charts, let's look at the 60 day SPY chart:
As I am writing this, futures are up significantly in the premarket. I will be looking for a move above the 11/28 highs to get more aggressive on the long side. A few cautionary notes are in order. I have been getting daily updates from
Retracement Levels, and have found them to be very helpful. The site's author has had some success identifying high-probability reversal points. He sees one such area near 904 for SPX, which falls just above the 11/28 high. This market seems to have a propensity for false breakouts and breakdowns on index charts, so I will be a bit cautious around this level. Anyway, check out the site, and the email updates are free.
It is possible that traders may reconsider their reaction to Friday's employment report. I noticed some odd divergences. For instance, OIH was down early with lower oil, but ended up 2.5%, with oil closing lower by over 3%. Commodities in general are still dropping:
As is the Baltic Dry Index:
The McClellan Oscillator says we are overbought in the short term.
