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One can hardly rely on technical levels at this time

By Lawrence G. McMillan

Yesterday had all the earmarks of panic selling, but it has shaken the confidence that had been gathered throughout the strong October rally.  Once again, it seems that the majority of the major players are still acting in a like manner daily, so that these wilder-than-usual swings take place. $SPX sliced all the way down through the supposed support at 1220-1230, and traded as low as 1215.  A very late rally brought the futures up about 8 points between 4:00 and 4:15 yesterday, and that was not reflected in the price of $SPX (but will be this morning).  Overnight, more volatility has ensued, with the S&P futures rallying 13 points at one time, but then giving it all back.  Right now, those futures are up a couple of points, which means that $SPX will open about 10 points higher. 

Given that $SPX blew through supposed resistance last week and then fell through supposed support this week, one can hardly rely on any technical levels at this time.  The greed/fear factor and the uniformity of daily market opinion exacerbate this.  In the fulness of time (which could be just a few days at this speed!), we may view the last two days’ action as a mere pullback to retest the breakout over 1220 that $SPX staged last week... 

To read the rest of Larry's market commentary from this morning's report, subscribe to McMillan's Daily Volume Alerts.

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