There was a lot of talk last week regarding Cyprus and it's ramifications on the broader market. As they scramble right now to come to terms with a deal I will express my short term market opinion.
The chart above is the S+P 500 intra-day chart using the 30 minute interval. This chart goes back the last 20 trading sessions and the last swing low at 1485. We had a 24 point sell off shortly after the swing low at 1485 was put in (first rectangle). After that we had 3 drops of exactly 7-8 points on the way to the last swing high at 1563. Last week with the volatility coming from said Cyprus news the market put in an almost equal sized 25 point drop as the one that initially started this short term bull market campaign.
The fact that the bears were not able to push this market any lower than 25 points is bullish to me for the short term. I believe the low at 1538 will hold and the next move will take the S+P 500 a little ways further to new all time highs above and very likely take a peek above 1600 for a short while.
Once this short term rally is completed a drop in the major averages of 15-20% will proceed. I expect the S+P 500 to trade below it's November 2012 low at 1340 before all is said and done. For more info refer to my previous market update post.
