The gains of the past two sessions have largely been erased on each day, including this morning’s “coming around the mountain” intraday chart of the major indices. That said, the market is far from falling off a cliff. If anything, we are simply reverting back to the flatline. While breakout plays are obviously having a tough time sticking, the overall technical picture is still constructive and has suffered no real damage.
I must say that I find it amusing to see how many traders on the Twitter stream are chomping at the bit to see this market roll over. Even though the past two sessions are basically in the green and flat, I cannot recall a time when so many were exclaiming with pride at how unhealthy they perceive the market to be. In reality, we have a 20 day moving average rising up to price, a 200 day moving average that firmly held a test last month, and a 50 day moving average attempting to smooth out below the current action. Moreover, the majority of the gains from the rally over the past few weeks have held. While that picture can obviously change quickly, when so many seem to anticipate it I grow skeptical.
Separating emotion from analysis is one of the most difficult disciplines to master as a trader. There is seemingly every reason to be a bear here, and it sure seems easy to follow the pack. Despite finding ourselves in Fade City the past few days, the overall technicals are still indicating that we are within the borders of Bull Country.
If you enjoy the content at iBankCoin, please follow us on Twitter
Thanks Chess. Just because we can trade like Scalosians doesn’t mean we have to.
@chivo to embed use this (h/t po pimp) : [youtube=http://www.youtube.com/watch?v=XXXXXXXX&w=640&h=385]
XXXXX is the code for the video you are embedding. I think the last part for width and height is optional.
Sorry posted to the wrong window. LOL
As for the case of bearish technicals, run something like a 20 day intraday chart with 20 min intervals on the SPY.
cherry picking
Wouldn’t say that, just different time frame. Short-term (next couple days), bearish IMO.
so true. it is amazing how so many keep telling us how much damage there is and how horrible it looks. Yet the market doesn’t seem to care what they say!!