The S&P500 fell 5 percent to 1,022.58 this week, slumping all five days and closing at the lowest level since Sept. 4.
Stocks fell for the second week, with the S&P 500’s 50-day moving average dropping to 1,111.66, compared with the 200-day moving average of 1,111.77 in a price-chart pattern known as a death cross. Death crosses happen when the first number drops below the second. The benchmark U.S. index also reached its lowest level of the year yesterday.
The market is entering into bear market zone. In my experience, the market are usually in a very oversold situation when a death cross is confirmed. In the mean time, market will rebound to the prior support 1040, 1056, 1071, 1085 which is now resistance provided yesterday's low 1010 is the short term low. From now, in the medium and long term, it is better to short at the top of every rally intead of buy at the bottom of every sell off. It is the technique of playing a bear market.
Now, the risk of holding short is high, I suggest people lighten the short exposure and wait until the market reach the resistance I mention above or short again when it break 1010 support.
If you short this market when it broke the last support 1040 and cover it at 1010, you should have 30 points quick gain in a few days. Also if you long it at 1010 yesterday and ride it to 1030, you should smile for a 20 points quick gain in a day. That's the art and beauty of technical analysis. All the supports and resistances are base on my careful study and research, so if you are my blog's fans, I won't let you disappointed.
By the way, I sold all my TYH at break even today. I expect a surge in today's market, but it didn't happen. In my philosophy, when the purpose of holding a position is not exist anymore, I will not hesitate to let go.
Hope you have a happy July 4 weekend.
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