The S&P 500 Index settled just below the recent support 1,070 neighborhood, with the index down 4.3 points, closed at 1067.36. Merger and acquisition activity boosted stocks at the beginning of the session, but technical resistance was quick to send the broader market back to the neutral line. Trade was then range bound until a late session slip left stocks to settle at their lows. Economic data has been showing gradual signs of weakness there's still an overshadowing concern that will likely keep any rally narrow.
Technically, market is oversold, but not extreme oversold, it's risky to bet on either bulls or bears. In the mean time I will only accumulate short position for swing trading, that mean I will hold it for a week or longer. However, I will only day trading the upside market and will not hold any long position overnight. I will wait for the rebound of this oversold market. Next resistances will be 1088, 1100, 1117, 1130, 1140-1150.
Base on the seasonal factor (August, September and October are the bearish months) and the recent economic data, the best strategy right now is to Sell/Short any extreme rally at critical resistances.
For day traders want to pick up some quick money. We may have one or two more sell off days to bring this market to a extreme oversold mode. At that time you buy it at the critical support levels will have a pretty good risk reward ratio. I project the sell off from the high of 1128 to the first leg low of 1069, then I have the following projection targets. 1063, 1041, 1019, 1005, 982, 946.
Two days ago, market tested 61.8% down trend fibonacci projection at 1063 and rebounded. The next support will be 1041 which is the 100% from the last leg down from 1128 to 1069. 1141 is very strong because it was tested two times on May and June. I am very sure the market will rebound tomorrow or Wednesday if 1041 is hit with extreme oversold mode. Hopefully, I can day trade when this happen.
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