In my previous post I noted what I believed was the 'death spiral' in the markets and the economy in the weeks and months to come. Well this post will detail what I think will happen in the next few days to weeks.
Gaps are meant to be filled. They are magnets. From the Friday lows to the Monday gap up is a lot of air, and that gap has to be somehow filled. We are now sitting on resistance 50 day MA on the daily chart @ 117.5. 118.5 will be a very heavy resistance level. In the near term, the market should pull back to gap window (115.2) and possibly gap fill (110-112), and in the extreme case, a retest of the lows last Thursday (105), which also happens to be the February 2010 lows. Then the market should rally higher and make highs for the year (125-140) before the death spiral that I believe will happen.
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