Last week on Long & Short Investment, I had written about "Fibonacci Retracement in S&P 500" to determine the direction of th Stock Market. I pointed out potential breakout to 50% retracement level at 1,130 and 61.8% retracement level at 1,150. Yesterday, we saw S&P 500 making a quick move higher to 1,130 at open and then declining back down to its 38.2% retracement level at 1,110 throughout the day. This turned out to be another "Bull Trap". We definitely need to very careful of this trap.
Consider the following support and resistance levels:
If S&P 500 make another breakout above 1,120, then expect another rally to 1,130 and possibly to 1,150. If S&P 500 cannot hold above 1,110, then expect potential fall towards 1,040 one more time.