Dow was up 115 today and the S&P was up 15. After a couple of up days, it seems everyone is all smiles, recommending buy after buy and looking to throw the money into the market. The price action is concerning however. Didn't we have a few up days not too long ago and then get hammered (big fall on Tuesday and Wednesday of last week)?
Well it looks like we might be in danger of that happening once again this week. First let me get this straight. I'm not saying we're doomed for a huge fall right here, right now. On the contrary, tomorrow will probably carry on today's rally. Based on the fact that the Asian markets are looking strong at the moment, we'll probably see a positive reaction tomorrow.
Soon, however, there will be resistance. The Dow and S&P have their middle bollinger band (right around where the first bounce peaked) to contend with very soon if not tomorrow. That could put a halt to the run. Also, the downward sloping 50 sma will provide significant resistance for the indices. It will be a battle to retake them if the indices keep moving upward.
The bottom line is that it just doesn't seem like the time to fall in love with the market. There is a lot ahead for the major indices to do before we get on track for further upside. I'd approach this market with great caution.
Keep watching the price action especially as we get to around 1409-1410. If the market can't break through this, then we could see some nasty blows in the near future.
I'll be back tomorrow.
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