Relief from possible European short selling ban, and yet another kissing moment between Merkel and Sarkozy next Tuesday, are sending shorts scrambling to cover. Whatever the reasons are, traders have to trade. We have a support @ 1100 on SPX, and a lid on it @ 1170. We can sit around and strategize why one or the other will give, or simply use those two to trade the range. Until we go above 1170 or below 1100 we will have no direction. Furthermore, this 70 point box is a gift from heaven. Now we have a clear objective once breakout occurs.
So after this observation I have new near-term targets for SPX: 1240 on the upside and 1030 on the downside.
I absolutely think that a boatload of longs who are looking to break even will sell in between 1240 and 1250. Shorts will reload there as well, inside 50-61.8% retracement zone. If the timing coincides with Tuesday meeting of the love birds in Europe, it is a definite sell for me if all they do is exchange the vows. When did you see anything concrete decided without German parliament? Those folks are having bailout fatigue by now. We have seen this movie before. If there is something huge to be decided there, why is Euro only up 29 pips??
And if 1100 on SPX breaks, 1030 is a logical target - right around last years low.
Let's trade this! Screw the machines!
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