S&P 500 Retests 50DMA And Other Positive Market Signs
Dr. Duru | Apr 18, 2013 03:06AM ET
: 39.3%
VIX Status: 16.5 (an 18.3% increase!)
General (Short-term) Trading Call: Buy for a bounce off 50DMA only
Commentary
The sharp churn continues in the stock market. The S&P 500 (SPY) closed down 1.4% yesteday, after bouncing cleanly off its 50-day moving average (DMA). Adding to the “magic” is a close that exactly matches Monday’s close and Tuesday’s open. This is the same level that dominated trading from April 3rd to the 8th.
While the S&P 500 has gone exactly nowhere since Monday’s calamitous close, the VIX has lost some ground after spiking again Tuesday. It pulled back after surpassing Monday’s high – an early sign the selling pressure may already be receding to leave the 50DMA support intact.
T2108 is down by a rounding error from Monday’s close. At 39.3% it has yet again crossed through two major T2108 threshold levels. It is now in the 40% under-period. Unlike Monday, T2108 is not quasi-oversold since the previous day featured a large increase in T2108 (from 40.7% to 50.1%).
So, my anticipation of a bounce is not as strong as Monday’s when Apparent Lack Of Negative Sentiment On Apple Makes It Hard To Call A Bottom .” A refresh of my sentiment analysis will be a part of my pre-earnings review. I will be more optimistic if I see more pessimism (classic contrarian thinking).
I expect the rest of the week to test traders’ nerves just as much as the first three days. Brace yourself and trade favoring caution over confidence.
Black line: T2108 (measured on the right); Green line: S&P 500 (for comparative purposes)
Red line: T2108 Overbought (70%); Blue line: T2108 Oversold (20%)
Get The News You Want
Be careful out there!
Full disclosure: long VXX shares, calls and puts; long AUD/JPY (net long Australian dollar); net short Japanese yen; long AAPL shares, calls, and puts; long SSO calls; long INTC puts
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.