Market showed some strength today after being down 7 out of the last 8 trading days, but considering all technical points, this was a weak rally.
- Sell-off volume last week was in excess of 4 billion shares traded for the S&P 500. The rally today only had $3.5B.
- SPX hit higher lows since August, but the MACD reached lower lows, and is now below the 0 line.
- SPX could not penetrate the 20 EMA - it didn't even touch.
- The SPX has fallen out of a rising bearish wedge (don't foget).
Until the SPX can close above the 20 EMA, I still wouldn't enter in new long or short positions. I expect tomorrow to also be a light trading day as most are waiting for Alcoa's earnings announcement on Wednesday.
All biases, sentiment, and upcoming earnings aside, that bearish wedge is still intact as of the close today (10/6). It closed just under the top edge of it today. If the wedge were to remain intact, we should have the answer by tomorrow's close, and market should be unchanged or down tomorrow. Wouldn't the next stop to cover shorts be at about 1000? Your thoughts?
ReplyDeleteYou're right, the SPX closed right under the bottom wedge trendline. It actually broke through intraday but wasn't able to stay above. Tomorrow should be interesting to see what will happen. The trend is in tact, so I think the market will continue to move up. As for shorts, what stocks are you looking at? The timing to cover shorts may be different for each individual stock, and why do you say 1,000 as the point to cover?
ReplyDeleteToday is critical day obviously for the descending opening triangle. That situation SHOULD be bearish, but the race to the upper line on higher volume yesterday was noticeable. We'll see if it breaks out today or not, and on what volume. My 1000 point level was just a guess, based on the how the market seems to be breathing in that opening triangle and by roughly extending the lower line of the triangle. As far as shorts, I just prefer to use the short ETFs. I hate getting emotionally wrapped up in a company and its products, CEOs, PR, etc.
ReplyDeleteDisclosure: I am just a newbie trying to learn the playbook as much as I can. Good luck and thanks for your insights and teaching.