Beginning to Digest Gains

After the powerful move higher yesterday, markets are beginning to digest the gains.  You can see with a quick glance that the $SPY has bounced the strongest of the charts below as it is the only one to exceed, and hold above, the 61.8% retracement of the October high to the November low.

A good level to keep an eye on today is the 2 day volume weighted average price (vwap),  this shows the average price from yesterday and today.  Understanding the average price that people paid on this move gives us insight into the psychology of the longs (who are profitable above) and the shorts ( who are profitable below).

These numbers will change as new price is factored in through the rest of the day, but currently the 2 day vwaps are located at

$SPY 124.41

$QQQ 56.26

$XLF 12.65 (right here)

$SMH 30.40 (also location of daily pivot)

The week to date, vwap’s will also be important to monitor as potential support if the 2 day levels are breached.

click chart to enlarge