Opinion: Question reply

The market is getting more and more interesting in the last week and I?m keeping a clear head despite my bearish bias. Any thoughts?
Edgar,
2D Trading

After Friday's big sell off it is easy to be bearish and today the NASDAQ 100 started to show the kind of follow through downside typical of the last two days of light gains. But I am not 100% we have our top (I do think we are close going on the relative positions of the NASDAQ Summation index, NASDAQ stocks over the 50-day MA, and NASDAQ stocks on PnF buys indices) although I would look to calling a top a more technical issue than a working, trading issue (i.e. if you have made money since October now is as good as time as any to bank it). From a workable trading issue, last week's highs are a good barometer as to whether one should be in the market or not e.g. a move above 2,330 in the NASDAQ has little resistance until it gets to 2,800 - so why sweat peanuts now by buying at 2,260.

The problem as I see it for the bears was the overkill of Friday's selling; it was too much, too fast. Monday's and Tuesday's light trading was not unexepected considering, but what bears have to worry about is if these small gains continue until it comes to a point where Friday's losses are reversed into gains - then you will have Friday bull sellers itching to get back in, and shorts scrambling to cover. From there it would only take a few points to have the markets back at all-time highs and the rally rolling again.

So, in summary; charts are ugly and look bearish. My hunch says markets aren't done yet and there is a little more juice left in the tank.

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