This week was bullish overall, but volume was very light. The major indexes appear to be putting in a swing high at their respective levels. The financials and Russell 2000 are showing significant relative weakness on multiple time frames. This is important, because the markets cannot continue much higher without support from the Russell stocks and especially the financials.
Next week will be very important in determining the direction of the markets. If stocks break down next week, then things could start setting up for the downside. Otherwise, the medium term trend is bullish and the long term trend may start healing itself if the markets remain bullish to close out the month of November. However, do expect a down leg here as we may be putting in swing highs across the board. It is impossible to tell where the next swing low will be, or even if this is a swing high (not yet confirmed until this down leg is confirmed). It is important to trade based on what is happening and want what the market wants. Keep an eye on the significant support and resistance lines and how the market reacts to them.
Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately.
Happy Trading,
Jason
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The SPY (S&P 500 tracking ETF) gapped down slightly this morning, filled the gap and ran higher into resistance at 110.40 and 110.5o, and reversed. SPY found some support at the 110 mark as expected (Support once broken becomes resistance), but broke down around 11:05. Right now, SPY is down about .5% at 109.6. Price is consolidating here intraday. We may see some continuation to the downside into the close. If SPY closes under 110, this could be the start of the next down leg as we saw a doji yesterday after a strong up leg, followed by a lower low and lower high on the next daily candle (today). Next support on spy is 109 followed by more significant support at 108 (on a breakout above 110, expect resistance at 110.5. After that, there is not much resistance until 120!).
The Financials (RIFIN, XLF) and Russell 2000 (IWM) are leading the markets lower today. The VIX is popping up about 5% right now which is bearish. The TICK and TRIN are rather neutral. It looks like today’s sell off was sparked by a worse than expected EIA Petroleum Status Report. Lookout for the Treasury Budget at 2 as that could be a market mover as well.
This morning I picked up more short positions in the face of the up move. Needless to say, that was a little more difficult to do than I had hoped it would be. Psychology plays a big role in stock trading.
Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately. Check back this evening for your Post Market Analysis.
Happy Trading,
Jason
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