SUPPORT...WHICH SUPPORT?

My first thought, at the market open today, was that the 930 support had been broken and we were about to sell off for the next few days. I even told one of my classes to begin looking for bearish trades. This was before I had the opportunity to look at some other charts. That 930 support level was based on the 5/08/09 high that we had recently broke. When you break through a resistance level, it will often act as support when the stock (or market) pulls back to retest it. When I looked at the charts of the DOW and Nasdaq, I saw a different support level. The DOW and Nasdaq are at the support of the 5/08/09 high, but the S&P 500 is finding support at the 920 area which goes back to the highs in January and February of this year. All this would make sense since we dropped almost 200 points today on one of the lowest volume days of the year. Not exactly a reason to panic. There are also a lot of bullish ABC patterns in the finance sector, energy sector, and many others. If we break this support within the next few days, then I would feel there could be more downside. If we rally in the next few days...and if we break the 950 resistance we have been watching so closely, we could have a bullish move that takes us to 1000 on the S&P 500. Look for confirmation on your bullish trades and watch this new support area to see if it holds. Just use the recent patterns posted on the blog. Most have still held their support and should move up if the market continues to rally. If we break this support, wait for a small rally and look to buy puts on the SPY, DIA, or QQQQ.