The S&P ended on another strong week with a bullish hammer, continuing its reversal from the 200 week MA. My previous analysis anticipated this so it's positive to see some strength come back into the stock market. This comes as no surprise as we were very oversold on the daily RSI dipping below 20, which is similar to what we saw towards the end of October 2018. The weekly RSI also got very close to oversold, and was the lowest it has been since 2011.
Now we have to see if the stock market is ready to push past key resistance points. As I stated in my previous analysis I expect to reach around 2600 which was the last major support zone we broke through a couple of weeks back. I still have half of my position left after buying off the bounce from the 200 week MA, and I plan on selling at 2570. This is just to ensure that I make a nice profit as timing the exact top is often difficult, and you can see the .382 fib level sits at around 2574.
If we reverse down from 2600, I will be anticipating a higher low being made on the weekly time frame. I will look for reversal signals to buy back in and update on this process if it happens. Even if the stock market is entering a longer term bear market, I expect some choppiness before the next leg down which is worth trading. I will be far more bullish if we start to break through the red downtrend line, and will be taking on longer term positions if we get to that point.
For now we will see how next week plays out, and evaluate from there.
Previous analysis:
Now we have to see if the stock market is ready to push past key resistance points. As I stated in my previous analysis I expect to reach around 2600 which was the last major support zone we broke through a couple of weeks back. I still have half of my position left after buying off the bounce from the 200 week MA, and I plan on selling at 2570. This is just to ensure that I make a nice profit as timing the exact top is often difficult, and you can see the .382 fib level sits at around 2574.
If we reverse down from 2600, I will be anticipating a higher low being made on the weekly time frame. I will look for reversal signals to buy back in and update on this process if it happens. Even if the stock market is entering a longer term bear market, I expect some choppiness before the next leg down which is worth trading. I will be far more bullish if we start to break through the red downtrend line, and will be taking on longer term positions if we get to that point.
For now we will see how next week plays out, and evaluate from there.
Previous analysis:
Comment:
2570 target hit today, I have closed the rest of my position. I am tempted to enter a Short position but I think I will play it safer and wait for a retracement before entering another Long position. It's possible that we will continue to climb higher up to 2640, so I will be carefully monitoring the price action this week to see if the bulls still have some strength.
Comment:
Price topped around 2595 today, which is close enough to my 2600 top. I am expecting a retracement back down to at least 2530 and probably lower in the next few days. Then we shall see how the week ends and re-evaluate. I took on a tiny short position in the NASDAQ today after we made a lower high on the smaller time frames. I plan on selling around 6400 as I am expecting us to retest that support zone. I see the NASDAQ as the strongest market mover right now so It's good to compare its price action with the S&P.