S&P500 surged 32.21 points today. Short term traders covered their short position today. Market may have a short term rally mode until the critical resistances come into sign.
S&P 1040, short term resistance two days ago, now become support. If market retract, I don't think it will break 1040 provided 1010 is the short term bottom. I may long this market if it retract to 1040 and rebound.
Next resistances are 1071, 1085, and 50 days moving average 1104. These three resistances are very good short opportunities. If you are not greedy, you can make some quick profit easily. You just need to wait until the market fade out at the resistances area with extreme overbought 5 minutes, 15 minutes and 60 minutes RSI and Stochastics, then short the market with stop loss few points away the resistance and profit target at the next support.
Although today's rally seems like a very powerful one. I still don't convince that market did find it's true bottom, First of all the volume is not high enough, short term traders cover all their short position, but long term investors did not participate. Secondly, there is no real panic capitulation happen in this bottom. When a bottom is lack of panic wash out, the structure and foundation will not be sturdy. This is a counter rally in a bear market. I really looking for real bottom at S&P 940-960, as low as 860. However bear markets counter rally always deceptive, the strength of each rally may make you think that the bear market is over.
Don't fight the tape, follow the flow of the market is the basic element to survive in trading business, so in the mean time, I will wait for critical resistance to short, but I won't hold it for long because I know bear market counter rally like this one may keep going for some time if the news and earning result cooperate.
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