Recently there have been a number of technically inclined market pundits predicting that the indices will retest the December 24 low. Retests are the conventional wisdom so it is not surprising that there are technicians that think it is likely to occur in this case.
It is easy to understand the arguments for and against a retest. If you look back at the market action in 2009, there was no retest of the low. Once the market turned the indices went pretty must straight up for years. That seems to suggest that there isn't any statistical evidence to suggest that a retest is inevitable.
The technicians that are looking for a retest generally do so because they have an overall bearish bias. If you believe that the rally isn't warranted and that a reversal will take place then the logical action is for those December 24 lows to be of some significance again. If you are a bear, then a retest is a very logical belief.
My view is that I really don't know. In fact I view it as counterproductive to even make such predictions. Until there is move evidence you can't make a reasonable prediction of what will happen. You might as well flip a coin at this point.
My approach is to stay focused on the action in front of us. If the indices roll over and start testing some of the support levels that have developing in the last month then we can start contemplating the risk of a retest. If the 50-day simple moving average of the S&P 500 at 2,616 comes into play then we can start to wonder how deep a pullback can go.
At this point in time, all the talk about a retest of the lows is nothing more than a sensationalist headline. It doesn't help you trade this market and it may even push you to have an unrealistic bias that will cost you in the shorter term.
This market is currently undergoing a consolidation and that is all you really to know. When that changes then we can change our market view.