The S&P 500 initially rally during the week but found enough trouble at the 2650 level to drop and start falling again. I believe that the market forming the shooting star suggests that we will test the 2600 level again, but I also see a significant amount of support down to the 2500 level after that. I believe it is only a matter of time before the buyers return though, and therefore I’m looking for buying opportunities. We may have a couple of weeks of noise in the meantime, so I think waiting for the right weekly candle will be the best way to deal with this market. At this point, I think that if we break down below the 2500 level, that in some ways would be the easiest way to take a trade, because it would be a breakdown of significant support. At that point, I would become very bearish.
However, I suspect that waiting for a weekly close and formed a hammer or some type of impulsive candle to the upside would be a signal to start buying. The alternate scenario could be as if we break above the top of the range for this past week, because it would be a strong sign to start buying as well, as we continue to look towards breaking above that resistance, and perhaps reaching towards the 2800 level after that. I believe the buyers are coming back, but we may have a couple of noisy candles ahead of us.