We have seen this market blow past every single level of “support” in the last two weeks. True support is only known in hindsight which is why I always refer to it as “potential support” levels. So does that mean we shouldn’t attempt to look for levels where the selling pressure may subside and buyers begin to show up? Of course not!
It means that we look at these levels as areas of interest, the way cops refer to persons of interest. They cant blow their case by acting before the evidence is fully complied. And we cannot buy at our perceived levels until the PRICE ACTION confirms we have a valid level where we can define risk and attempt to participate in what may be a large bounce. At these levels a bounce seems more reasonable than further selling, but don’t forget that the market does not trade on logic. Only price pays!
The weekly chart below shows the volume weighted average price of the $SPY since the March 2009 low. That level is approximately 110.70 Will it become just another level for the market to blow past or something more significant?