Saved by Fibonacci

Mid-week market update: I suggested on the weekend that the stock market was oversold and poised for a short-term rally (see How to trade the failed breadth thrust). The rally seems to have arrived.

The weakness in the S&P 500 has been stunning as it sliced through multiple levels of support like a hot knife through butter. The decline was halted at the last remaining support was the 61.8% Fibonacci retracement level, which also coincided with a volume support zone. 

Saved by Fibonacci! The logical initial upside resistance is the 50 dma at 4020 on the S&P 500, or 401.25 on SPY.

The full post can be found here.