The recent sell-off in the market has been quite impulsive and has caught many investors by surprise, especially yesterday's 100 point drop on the XJO. When we see markets pull back (in this case from the high on 2 May) , they can find support at the previous swing low, but should ideally not close below the second swing low. The second swing low for our market was 4143.7 which occured on 7 March. At time of writing, our market tested that level intraday but is set to close above it.
If the market is going to rally, then it will rally from here. When I look at the charts, it has the potential to make a swift return back to 4300. This will be led by our miners, which have been oversold in the short term. For some of my trading clients, we have closed off shorts in the miners this afternoon and gone long BHP, RIO, and WPL for a shor term trade. Traders need to place tight stop losses.