If you think about it Friday's action was truly amazing. Why? Because the market found support pretty much exactly where we said it would. I said watch the 2,040 support level in the S&P 500. The low trade was 2,039.45. For the Russell 2000 I said watch the 1,100 level. The low trade was 1,101.57. For the NASDAQ I said watch the 4,700 level. The low trade there was 4,684.29. (Due to it's nature the NASDAQ will always be more volatile than the other Indexes)
How can this be? There is no way possible that a fundamental analyst could explain this phenomenon, and as we have seen fundamental analysts will believe in just about anything. And don't even bother asking an academic. They will spend countless hours 'proving' that support and resistance levels are a myth and are not worthy of study, despite the fact that we see everyday that they are real each and every day. The bottom line (which can make you money) is that the market does indeed have a memory and Friday was indisputably proof of it.