Avoiding the Inferno

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After yesterday’s sudden and powerful move lower, we are overall in the green today but not in a very convincing manner. Whenever the Nasdaq Composite Index, which is currently flat, lags the S&P 500 and especially the Dow Jones Industrial Average, it is usually a very short-term sign to me that the intraday action is not full of hearty risk appetite, due to the fact that the Nazzy is chock-full of marquee, growing names. That said, the market may have trapped some eager bears into yesterday’s plunge, and we could easily see a squeeze this afternoon.

Regarding the more intermediate-term posture, which is far more important to me as a swing trader, the S&P 500 found support right at yesterday’s lows. Beyond that, it is significant to see precisely where the buyers stepped in, which was in the 1220-1230 range, marking the very top of the prior multi-month parameters. A push below 1220, and the bears would have been prepared to inflict some more serious technical.

For now, though, this market is walking right up to but avoiding the inferno at all costs. The long setups that had developed in recent days obviously saw some setbacks to their charts yesterday, but stabilization today could quickly fix that situation.