âI am betting on a swift reversal to the downside coming soon.â With options expirations this week, there should be some volatile moves. We are approaching overhead resistance in the SP-500: 1243: Sep05 High 1246: Aug05 High 1254: 0.618 Fib Retracement from Oct02 Low to Mar00 High The following scenarios assume that itâs more likely that âtheyâ will test overhead resistance (i.e., stay in the direction of the current trend) before they take it down. 1. A test of 1246, a slight pullback, then a test of 1254, and then a major reversal. 2. A test of 1246, a slight pullback, then a test of 1254, a slight pullback, and then a major breakout. 3. A test of 1246 and then a major reversal to test the bottom of the current range.
fwiw...It's obvious that the markets have risen sharply and are TECHNICALLY oversold. but I am somewhat cautious about shorting now. There has been a lot of FUNDAMENTALLY excellent news recently. GDP up to 3.8% Unemployment is excellent last 10year treasury auction turned away lenders New Fed boss Bernacke well received Us Dollar up big recently Last months deficit less than expected Oil prices falling Corporate profits still good World wide markets rising And of course, we are in a period of great Bullish seasonality.
Do you mean technically overbought? I agree on your points. Even though we've had an extended rally I'm nervous about shorting this market. "Don't fight the tape." Or, as one trader always used to yell at a coworker of mine, "You're not bigger than the market!!!!"
Thats why the S&P is up 60 points off the lows in the past few weeks. Everything u mentioned is baked in to the cake.. now lets look forward..
When that happens it means big caps are being bought. Advance decline line has many more non big caps then big caps. When non big caps are sold this will affect the decline line like a big cap but the volume is much lower on most of these and it does not come out of volume same way. etc. John
Announcing your bearish/bullish sentiment without a time horizon makes a discussion virtually worthless...