Thursday,
The markets further solidified a bottom today from which they can bounce from… This means those looking to trade tomorrow should do so in favor of the longs rather than shorts, but there is the potential that the market could break down and continue in the direction of short plays, so have that stop and exit strategy in place before you enter the trade.
The DJIA 12 points today adding to yesterdays’ gains but the real story is in that hammer candlestick formation confirming my bounce theory. You can make assumptions all day long about how high the bounce can go, but the main point is to be trading in tandem with the overall market – don’t be short when your market is bouncing higher.
The NASDAQ lost 8 points today, but this just means it is more due a bounce than it was yesterday, and I would look for this next week. Yes the rally could start Friday, but I am not so certain there is enough confidence in the market to have investors holding over the weekend… I would not do it; not on the long side anyway. The NASDAQ is finding support on the middle BB line and that means this bounce is highly likely to be the last one before our next peak takes us to the lower BB line. In other words, don’t get to attached to the long trades, they are not likely to last, and if the NASDAQ fails to break into new highs we will have a double top signal that could put bears in complete control of this market for some time to come.
Today’s MPT (Market Power Trend) Rating, which tells us what “Smart Money” is doing in the market and where support/resistance is came in at (03); this tells us today’s buying was not that of smart money and this confirms the lasting power of this bounce is nothing to get excited about. I would look for the market to repeat more of today’s action tomorrow, as lows are tested and new highs are made where short-term potential is relevant to those trading smart.
As Always; Be Smart, Be Patient, & You Will Be Successful.