Stocks fell again today with the disappointing economic data released. S&P500 fell 3.34 points. The low of the day is the support we recommend yesterday 1005-1008, actual low 1010.91. I buy some TYH when the market reached the low of the day.
I still holding TYH but I am willing to make a quick gain if the market can go back up to 1037-1039 because I am sure not too many traders want to hold stocks over a long holiday weekend. As a result, for tomorrow I predict the market will have an early morning to midday surge and follow by a late day slump.
The bottom 1010 in this morning is a technical bounce, like what I said these few days, 1009 is a confluence support, that means this support is the combination of several technical support. Therefore the power and successful rate, as well as the risk reward ratio are always optimized.
We have long tail doji candlestick chart symbolize high probability of trend reversal, remember this is a sign not a confirmation. well, the good sign are: market is oversold, rebound at confluence support, better than average volume, have long tail doji candlestick chart, July is not a crash month historically and seasonally. The truth is we still in an economic turmoil over Europe and domestic. And the reports came out last few days from China make the situation worse. All the US employment number, home sales, banking problems don't help at all.
Something is missing in this S&P500 1010 short term bottom formation. We always need some good news as a catalyst to form a real bottom reversal rally, unfortunately, we might not have this for some time. Theoretically, there are two conditions market will rally, either market react to some good news or the market at the panic and capitulation stage. The different is that market may or may not rally with good news but market will sure rally with extreme panic and capitulation.
In the meantime, I don't think we can rely on some good news to act as catalyst. In my experience, the only good time for a market to form a bottom in order to accumulate stocks is at the panic stage. However, Something is missing in this morning S&P500 1010 short term bottom formation. There is no panic emotional sell off, instead we have an orderly transaction. The VIX chart does not has a spike. In addition, there are so many traders are shorting this market at this bearish environment, if all of them are covering their short position, I believe the market will get a bigger force than the one we saw in this morning.
All in all, I don't really like this morning's bottom at all, I will buy this bottom just like what I did in this morning for a few days run. The real bottom I am looking for is S&P 950 which is my sure buy if all the panic elements are presented.
Short term resistance look out 1037-1039, and then 1050-1056
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