Market Setup Not So Bullish
Investors should always be very cautious of any rallys that ensue during a bear market. Most recently the NASDAQ and S&P 500 amidst troublesome earnings but lower oil prices have rallied without much resistance. It is ok to believe in the bullish sentiment, just becareful buying into it.
Applying some technical analysis we can start with the S& P 500 which which today closed at 1289.19. Higher lows have been made twice now since its permanent temporary bottom of 1200.44 on July 15th. Resistance is right here at 1290 and we look poised to move up, but be careful as this pattern has unraveled before. Take a look a the following chart and see how this same setup failed as the index could not break and close above the 50 day moving average,
Click to View Full ChartFor bears the way to play the downside is to grab some SDS (double inverse ETF) this week or short some shares of SPY if the S&P 500 cannot clear this 1290 resistance successfully or at all. For bulls a close above 1300 with accumulation volume keeps the momentum in their favor.
Alongside the S&P 500 the NASDAQ Composite is setting up what could be classified as a beautiful ascending channel which investors should know typically leads to lower prices. Today’s push above 2350 came with lower volume and should be admired with caution. Take a look at the following chart for a clearer view,
Click to View Full ChartFor Bears the way to play the downside is to grab some QID (double inverse NASDAQ 100 ETF) or simply short some shares of QQQQ. For Bulls buying into the QLD’s break today above $75 resistance looks appetizing as perhaps there is more upside to be seen.
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BEARS FTW!
Great call Blain, spot on