So Far, So Good

At the start of this week, I said The market has gotten pummeled, and it's going to recover. Maybe for a day. Maybe two. Or three. Or even a week. But it's only going to retrace to the zone (shown in this picture on the $SPX shaded in green) representing the 'neckline'.

Well, that's exactly what has happened so far. I drew the green zone at 1,600 on the $SPX. And what was the intraday day high both Thursday and Friday? 1,595.95. That's right - 5 hundreths of a point below 1,600.

Not that it hasn't been nervewracking. The Dow's 200+ point rise on Thursday doesn't bring joy to a bear's heart. But - again - this is exactly what I was expecting to see.

Next week is going to be critical. If the $SPX stays beneath 1,600 - hopefully, plunging to new lows - everything's set for a continued slump. If the market finds renewed strength from somewhere, it may alter the analysis. This is the most friendly market for technical analysis I can remember (in other words, everything seems to be working perfectly), so I'm optimistic.