Reasons for today’s strength can be found all over the internet, the discussion here will remain focused on price action. We have been observing the Fibonacci retracement levels from the October highs to the low from last Friday and today the market is reminding us of why it is good to use these price tools for reference points.
The $SPY has exceeded the prior support at 122 which would have been a logical place to look for resistance and has instead rallied up to the 61.8% level where it appears it should level out and digest the gains.
The 56 level is important for $QQQ because it is; prior support, ~50% retrace and approx level of the declining 20 and 50 (not shown) day moving averages. It seems there should be consolidation in this area.
Yesterday I expressed a lack of confidence in continued strength and if you shared my viewpoint then today’s large gap up ruined the opportunity for low risk entries. It is normal to question a patient and disciplined approach when the markets make such a large move and you are not participating. I always like to think of the phrase “it is better to be on the sidelines in cash wishing you were in than it is to be in the market wishing you were out.” Patience and discipline always reward us in the bigger picture.