Well, its been a little while since my last post and I am glad to be back. The Holidays were a bit more time consuming this year than they normally are.
The market has been holding on to its retracement level in the S&P 500, just above 800. Back in December, I said that 800 needed to hold to remain in the uptrend we have been trying to put in. So far so good. The market moved up about 15% from that call and then back down. It is now at the breaking point and needs to move up from this short term consolidation of the last week. There is an outside trend line on the daily charts that needs to be broken to the upside for the uptrend to take hold. This right now is acting as resistance, but once that gets broken to the upside, the path will be cleared for higher prices. I will post a chart of what I mean, so take a look below and check it out.
This week the bullish sentiment dropped and that is good for the bulls. The more people that think the market is not going up the better chance it has to do just that. Now the reading is 38% with a reading of 35 as very bullish. It had gotten up to 43% and just this week has backed off to 38. The market could base for a few more days getting the bears to bite on the downside theory. The new numbers come out on Tuesday of this coming week. If those numbers fall to below 35%, we have a very good chance to rally 10 to 20 % for the overall market.
Unfortunately, if this happens, I believe it will be short lived and will set itself up for another big drop, making fresh new lows. Not a pretty picture, I know, and I don’t like to think that way, but the way I think is not going to change the market. In past recessions, this would be the turning point to buy and the recovery will be first seen in the stock market, before anyone else realizes it. The market always looks out 6 months to a year in the future and if it smells a recovering economy, it will rally in anticipation of the reality. On the other hand, it will also know if it (the economy) is still on the ropes and going down for another beating, which is what I expect to happen after this rally. The market will do what it has to do in order to draw in new money, getting people to bite on a recovery scenario, only then to be gored by the bear trap. So be careful out there and plan ahead.
As far as daytrading is concerned, as I have said before, it does not matter what the market does, going up or down. We position ourselves to take a few small pieces out of the market and hit our daily goal of at least 2 points + on the S&P 500 per day. It may not sound like a lot, but it adds up nicely when you get it every day and gradually add to your position size. Below are some of the trades I have recently taken to show what I mean as well as the long term S&P 500 daily chart that I mentioned earlier. I may post again before Monday, have a great week end.
Vince
http://screencast.com/t/3bdutjDWE some of today’s live trades
http://screencast.com/t/bcOk1lFX3 some of today’s trades with commentary
http://screencast.com/t/jJJ7nwxws daily chart with notations
Related posts:
- Recap of the Week & extra training video
- Stock Market Pressure is building on both sides !
- Busy Week in the Markets Coming Up
- Big Move for the Markets Today
- Today’s low needs to hold, so far so good
Tags: Market Consolidation, S&P 500
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