This market is showing some resilience to sellers as the major indexes post decent gains on solid buying.
The indexes will all likely hit their 200-day averages with continuation of a rally.
Moving averages are like magnets for price action.
Tough call in today’s market is whether they’ll sink to hit the 50-days, or continue to edge higher.
Shorts got screwed with Tuesday.
Speculators far and wide have been waiting for a sell-off on the major indexes. We’ve been one of them.
But shorting is a lot harder than buying. Sharp reversal rallies that send sellers scrambling to cover feed on themselves until there’s no one left to feed it.
Markets do indeed slaughter the herd.
The idea is to get out with a small loss when you’re wrong.
But enough of the inner game of trading.
What we specialize in is Growth Stocks. And are quite impressed with the number of top-earning stocks set up in bullish technical patters.
Subscribers saw a handful breakout today.
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Volume leads price.
Whenever you see heavy volume stacking up long or short it’s a good bet that’s institutional money.
And in our opinion it’s the institutions that you want to be on the same side as.
Retail money, otherwise known as Mom and Pop ingesting market musings from journalists, are usually the side you don’t want to be on.
If we were pure technicians we’d say the S&P 500 will go down to about 850. That’s its 50-day moving average with a bit of symmetry with its previous move down.
But we’re realists. The market does what it wants.
Heavy selling Wednesday tilts the scale back clearly in the Bear’s favor.
We don’t give a whole lot of credence to candlestick charting. But another bearish candle with higher prices being unable to be sustained is more reason to doubt the Bull.
As usual, we don’t say much when nothing needs to be said.
We’re bearish. How’s that?
Monday’s Accumulation, or buyer dominated volume, across the major indexes could mean the end to the Bear’s short-lived reign.
It’s almost always riskier to be short given the propensity of the market to scream higher out of the blue.
Rallies, on the other hand, are usually gradual in nature.
Some have argued it’s because fear is a stronger emotion than greed. But who cares.
It is what it is.
Thursday’s light volume rally does nothing to change our bias.
We remain bearish after institutional grade sellers began unloading for the last two weeks.
Our seller-dominated market continued to drive declines across the broader market.
We expect to see the S&P 500 and Dow 30 undercut their 20-day moving averages.
The Nasdaq and Russell 2000 are already below these marks.
We’re also watching to see if seller volume dries up on the decline.
No Distribution days were made on any of the major indexes Wednesday.
Weekly analysis will be more revealing.
That’s another Distribution day notched in for the S&P 500 Tuesday.
That makes it three in the past two weeks compared to two Accumulation days for the same period.
We’ve anticipated this pullback.
As long as the heavy sellers continue to show up there’s no sense being Bullish.
Bam! A day after heavy buying we get even heavier selling.
This is likely the beginning of the pullback we’ve been looking for.
Never mess with a key reversal day like we had Thursday.
When all the optimism of a higher open erodes in the remainder of the session it’s more often than not a carrying theme for following sessions.
We’ll be watching sell volume on down days. If it dries up the Bear will be viewed weak. If not, hail the Bull.
More buyer-dominated volume sends the indexes higher.
Folks, all it takes is money and hope to move things higher. That’s what we got.
Pictures of Bernanke smiling yesterday are a big help.
So what we all ask now is: Have we seen the market’s lows?
Anyone who claims to know the answer is a liar.
The market is an unpredictable beast.
At best, we can only take odds on its movement week to week by analyzing price and volume.
Our analysis tells us when it’s good to go swimming and when it isn’t.
We still anticipate a pullback sooner or later. That’s when we’ll have our litmus test to see how Leadership stacks up.
The Bear launched itself over 900 on the S&P 500 today. The more than 3% move likely sent short-sellers running for cover.
We’ve been watching institutional grade sellers take position over the past few weeks. Today’s Accumulation was like an upper-cut to their jaw.
Next stop to the upside will be the 950 area where the S&P 500 will meet the heavy resistance mark of the 200-day moving average.