Yesterday was a really hectic 10-hour trading session where I was seduced into daytrading QQQ options, quite enjoyable, frenetic, and profitable, but I had to focus 100% on it.
SPX backed off the earl highs, you may say it tested the 200ma, just 2 points away from the SPX high, and then buyers' remorse set in.
There were a few more attempts at rallying but indecision (and fear?) prevailed for most of the afternoon hours.
So, here we are at this critical point in the market, ST & IT long, no doubt about that, but a market that seems to be either resting/consolidating or unable to go higher because of lack of buyers' motivation.
A quick resolution of the shutdown issue can provide a 3 to 5 % rally, good trade negotiations can also do that, but the markets now seem to be running out of catalysts to take it much higher. In such an environment, minor bad news can send it lower.
In my decades of experience, I have observed it is the reaction after the first 1 to 2% pullback that will determine the the next major market move. Of course, you may never get a 1 to 2% pullback until the market reaches a new record high!
But, I am looking for a pullback.\
This from GMM:
Because the S&P500 is now so overbought – the highest RSI since the market top – the risk of another facial from a short position is limited, in our opinion. Waiting for the 200-day to be penetrated, then setting a short limit order just a few points below the 200-day, right around today’s close.
The Stop Signal
Two or three green candle closes above the 200-day sets the index up to challenge the December high and key Fibo at 2800. Whoops, we were wrong again.
As always we do reserve the right to be wrong, as we, or you, or anyone else, don’t know jack scheisse about the future.
Stay frosty, comrades.