Key Technical Levels to Watch in the Markets ~ market folly

Friday, April 16, 2010

Key Technical Levels to Watch in the Markets

Adam over at MarketClub is out with his latest technical analysis video on the stock market. In it, he takes a look at the extended market as this rally just continues to march on and take no prisoners. He immediately points out that the Dow Jones is trading around 11,144 and that the 61.8% fibonacci retracement is just up ahead at 11,241 and could potentially be a source of resistance for the market.

Looking at the S&P 500, the fibonacci retracement situation is nearly identical as the market is trading around 1,211 and the retracement sits just ahead at 1,226. Adam points out that this will be a very key area to watch. By no means is he recommending you short this market just yet as that's essentially a deathwish. Everyone that has tried that thus far has burned. However, it's always helpful to be cognizant of key levels to watch in the markets. Click the chart below to watch the video:

Those above fibonacci levels are something to keep an eye on and you should really only consider putting out shorts once the market starts showing signs of weakness first. In the mean time, it never hurts to lock in some profits, trim some positions, and raise cash levels. While hedge funds will almost always have short positions on, you have to remember that they've been burned by the majority of those positions as of late. This technical analysis is obviously more from a market timing perspective and you can view MarketClub's latest video analysis here.

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