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Even the EU leaders admitted they were surprised of the rally

Yesterday I have read an article in The Guardian that even the EU leaders were surprised of the Friday rally:

“We were quite surprised that the markets reacted as well as they did on Friday,” EU officials said on Sunday. “We thought they would really tank and there’s still this legal uncertainty hanging over the deal.

Another thing is that the deal the EU officials came up with may actually be illegal. So are we seeing a correction to Friday’s irrational investors’ judgment? We will see today when markets close. At this point SPY (SPX) opened 1% lower and one hour later it was trading 1.5% lower. Will this downtrend continue?

On one hand this downtrend may be good for the market. From technical perspective, we needed correction from previous rally and now it may be happening. My expectation is that we will go down to 50 day MA and there we may bounce back up. If that happens, we will be adding a new higher low, which may potentially lead to a new higher high. And that may be a beginning of a new bullish trend.

Happy Trading!

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