Direction of the S&P 500 this week

The timing was right for the S&P 500 to make a low into March 6, and then to push up from that. The depth of the low, and the size of the rebound, were both rather outsized. In a sense, the depth was to a level perhaps expected to come later in the trading cycles. For now, the rally was getting overbought. Andre Gratian has mentioned a trendline level at 770 that corresponds closely with the 760 level and the SPY 77 max pain I've discussed recently, as well as the ChartsEdge forecast for this week.

So for this week, no need to over-think this - keep it simple. The markets will be ripe to pull back from the 760-770 zone. When that happens, the analysis will be about volumes, breadth, patterns and trendlines.

Looking past this week, the big game will be whether a pullback will fail over to new lows. For example, whether this is the first move up of a rally, with a pullback and then resumption upward that can be a great buy? Or is this really just a small 4th wave with a 5th wave to new lows soon. Will the answer be known quickly? My sense is that it will take longer than a few days, but also less time than the several months some may be expecting. But here's the deal: advancing volumes are starting to kick in, and that will probably make for a choppier path than the smooth declines we just saw on the last two drops, January and earlier this month. If I'm right, traders may need to be nimbler or make other adjustments to navigate and survive a choppier market. Yes, the size of moves may be good, but it may be a harder to ride a trend for more than several days.

Well nothing new for many traders, and my instinct may be proven unwarranted.

So again - just keep it simple this week, be careful out there as always, and happy trading!