Still More Work To Do

Futures shot up to the equivalent of 1208 on the S&P cash early this morning. Undoubtedly something likely occurred in Europe that magnified an imbalance in the thin market, but I'm not concerned with finding what it was, because it doesn't matter. I'm looking for price to get to 1208 anyway. The "reason" will take care of itself.

1200-1208 is a confluence zone of two different 38% retracement levels and is also where the market found support on the way down. The 50-day moving average is at 1205. All together, it's why I'm looking for a retest of this area.

1223.91 is the 61.8% retracement of the last leg down -- there's no reason that can't be retested, but at this point it would be a little deep in my opinion.

So far, the market action since the close of Friday feel like a burst of short covering -- almost all gap. Today will tell the tale a bit better.

Also take note of the downside should the market choose to fill in the gap a bit. 1182.60 is the 38% level, 1173.40 is the 61.8% level.