Feeding off of pain and euphoria. Find me on Twitter @greenlander1
Saturday, August 29, 2015
Aug 29 - Strong possibility of retest of lows
Although we have seen a strong rebound, I am leaning heavily towards a retest of lows in the next week or two. On these sudden drops in the past several years, it has been typical that a bottom is carved out with very volatile activity between the bottom and roughly a 50% retrace. The only exception was last fall's V-shaped bottom. While it is possible it will repeat, I am less inclined to think we are capable of seeing such a bounce because of the severity of this recent drop which makes last fall's drop pale in comparison. I picked up some at the money SPY put spreads expiring in a couple weeks at close Friday.
In 2010, both temporary bottoms retraced 50% before testing or breaking to new lows.
In 2011, we had multiple retests with most being rejected swiftly by the 50% level
Right now, we are at 50% in SPY and leaning towards seeing a drop this week and possibly more than 1 retest.