Today is Monday, November 16th and Wall Street rallies, catching many by surprise.
One day, a trend does not make, but it was nice to see the market keep its footing and start tossing out the bears. If we get another day like today, it could set off a feeding frenzy . The Bulls will be goring their way through those Bears like nobody’s business, leaving a mess behind them.
It has not really happened yet, but I only point out the possibilities. Last week, I just could sence it. Everyone thought we were going down. In fact, I am sure that they were surprised that we even made it back up to the higher levels by the end of the week.
Today’s close was very important and I was watching it. If we had a steep sell off at the close, that was not going to be good. It started to look like it was going to happen. Just after I picked up about 4 points for the session, the market stalled and went sideways. I finished trading, but I totally saw the break short late in the day. It started to look like it had legs, but it stopped right where it had to, to mount a counter trend rally back up. It made half of the sell off back and we ran out of time. This is 50% back up off the little sell off, typically a continuation point for a sell off to continue.
The Dow was up 136 and the S&P +15 points at 1109. The S&P is about 10 points off from hitting its 50% retracement (1120) level from it’s all time high and the Dow has already done it.
Let me draw a line in the sand. This will help define things a little better. If the Dow and S&P break down below last Thursdays low, we are going to get some selling behind it. This is what the Bears want and the orders will really kick it to dump shares that were accumulated over the last months.
On the other hand, if we can contain the sell off and mount a rally similar to today, it is going to bring out all the Bears from their hiding place and they are going to have to cover their short positions only adding to the rally that already is under way. That is why I say, it could be a frenzy. If I had to pick one, I would have to pick the latter, I think a lot of people made up there minds about this market going down a long time ago. I was one of them, but I repented, from my ways and now see the light. The light I am talking about is that I need to remain open-minded about direction and not make my mind up before price action tells me too. Although, this is what I said months ago, “I would have to see what is going on when we get there and combine that with market sentiment”.
One common mistake traders make all the time is that they try and pick tops and bottoms. It might be fun to try but if you are doing it with trading and investing capital, it usually does not work out for the majority.
It is best to let price action tell you what is happen and let the hero’s pick the tops and bottoms. We will not have far to trade-off the highs to see if in fact they are able to take it down. The last pivot low for the Dow is 10,171 and the S&P is 1085. With this market being only 25 points off that critical level, it pays to wait. Just the week before it was at 1029.
So, the trend it still up and I would say, we are smack dab up against resistance in all the index’s. If it closes higher from here, it is going to spark a big rally coming out of nowhere. At the same time we have to stay above the last pivot low as just mentioned to keep the rally alive. A break of that level, could end it.
That is it. Now we wait. There is a lot of news coming out this week. This is a link that shows what is coming out and at what time. http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm All traders should know these data releases. The news is not as important as the time of its release is, (my opinion). Don’t be caught off guard. Most of the news looks like it is coming out before the open, but Friday has a 7 am new release this week.
I believe everyone should always have a stop in place as they put on a position and that means the same second. If you don’t, it will only be a matter of time, that some event or unusual news release catches you or just market action, takes you and your account down, sending you to the corner.
I will talk about this and other things next go around, until then,
Good Trading!
Related posts:
- Reversal on Wall Street
- Wall Street Plunge, down 266 !
- Wall Street, “BOOM OR BUST”, which will it be?
- Wall Street Rally – Mission accomplished
- Sell off on Wall Street, Market sitting on Major Support
Tags: market rally, Wall Street
Please log into the site.