Although the SPY (S&P 500 Index tracking etf) bounce slightly exceeded the two previously posted bounce targets, moving about 1.75% above the former T1 level & less than 3/4% above the “next resistance level”, that bounce, assuming that it is complete, was well within the normal range of a counter-trend bounce as the SPY stopped well shy of the 61.8% Fibonacci retracement level. The reversal in the QQQ (Nasdaq 100 Index tracking etf), so far, occurred on the backtest of the previously highlighted multi-month uptrend line which also corresponded with the 61.8% Fibonacci retracement of the move from the Sept 19th high to the Oct 2nd low. Although it is certainly too early to say with a high degree of confidence that the bounce off of last Thursday’s lows is complete, the impulsive selling that we’ve seen so far today following the rejection of the Q’s off that downtrend certainly looks bearish. So far we have a clear downtrend with a series of lower lows & lower highs in both the SPY & QQQ. Only a move above the 9/26 (Friday) high of 198.39 would call the current near-term downtrend into question.
SPY & QQQ Bounce Likely Over