Stock Rally Reversal Targets

Stocks had trouble getting off the mat to follow through with yesterday's big end of day rally.  Markets flip flopped in and out of positive territory all day but closed in the green.  This was the result of a somewhat fractured market though since it was primarily technology and banks that pulled the market higher today from what I saw.  Volume was quite strong for a Friday rally at 1.2 billion shares, but still much lighter than what we've seen on declines the past several weeks.  More importantly, like I said earlier, the market rally was fractured internally with only 67% of total volume to the upside.  Far from impressive after a big hopeful surge in late day trading yesterday for the bulls.  An accross the board buying spree with solid volume would give the bears some pause, or should I say "paws" (get it? a play on words there: pause = paws.  Yeah I know, it was stupid).  Anyway, so far, this rally is starting off looking corrective.  So if we get higher levels I'll use it as an opportunity to add short. 

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The larger trend is firmly down so the market can fall through the trap door at any moment.  I have little doubt that the market will break below 1100 soon.  It looks like wave (ii) is a bit shallow right now but it's worth at least noting that it has stalled at the 23.6% fibonacci retracement level at the moment.  This is not a common stopping point for second waves.  They are usually much deeper.  So if we look higher we see a convergence of two key indicators at 1167 in the open gap and 50% fibonacci retracement.  If the market wants to carry higher early next week, I'll be looking at 1167 for a potential resistance and reversal point.  Seeing signs of the rally faltering in that area would be a good signal for me to add to my short position.

As for the euro, it too appears to be correcting in a choppy overlapping move higher right now.  The larger trend still appears to be down so I'd be shorting into rallies.

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PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.