Well, that was quite an opening move, pretty much straight down from the open into my 850 - 855 target range with the DOW down about 360 points. I bet we base here for a while, and since that move was so strong will not be surprised if it breaks down further. Strong support though, so we’ll see.
Just putting some Fibonacci’s on the chart shows that a 50% retrace of this 5 day rally would take the S&P Down to about the 820 area and the DOW to about the 8,150 range. A 61.8% retrace puts the DOW just beneath 8,000 and the S&P to 800. If we build a flag here in the 850 range and subsequently head lower, then the target would be approximately 825ish. That now looks possible. The manufacturing index came in at 36.2, the lowest reading in 26 years.
It’s possible that we hold support here, BUT I wouldn’t count on it. My plan here is to wait for a breakdown of 850 to get short to any degree and then to use that pivot as an entry/exit point.