thursday may 6 2010

Hi everyone,

Terry Laundry's envelope theory came to play last night as the S&P closed right on the mid channel at 1165.

This middle envelope has acted as support and resistance many time so I wouldn't be surprised to see a rally here.

If this level is broken then the theory suggests a test of the lower envelope which is at 1100 for the S&P. This equals a 5.5% move down and if the XJO is to correlate then it suggests we will find support around 4400.

So for now and as long as S&P holds here, I assuming or expecting some sort of bounce to form a double top or most likely a lower high which would be a decent selling opportunity IMO.