Strictly based on technicals I'd say that we're set up for a bounce. My short-term stochastic readings show the indices the most oversold they've been in about five weeks. They're also just starting to lift off of support levels. However, tomorrow is a quadruple witching expiration day so there's no telling how that will impact the action. Looking out to next week I don't expect to see much activity ahead of Wednesday's Fed decision -- not that I think they will actually do anything. My guess is that, absent any major news, the bears will go into a mini hibernation and the market could just float higher early next week ahead of the Fed. Hopefully we'll get some volume back into the market after the meeting and get some clarity on short-term direction other than sideways.
Research In Motion Limited (RIMM) is all over the news tonight after reporting earnings. It traded down near its 50-day moving average immediately after the report buy bounced back during the conference call. Technically, I like the bear case on it since it broke that April trendline. But I wouldn't want to initiate a short position with it being so short-term oversold. A weak bounce back near that broken trendline could be a gift for the bears.
No changes.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Up | Lat | Up |
| Intermediate | Up | Up | Up |
| Short-term | Down | Down | Down |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
It will be interesting to see how things pan out. Some commentator's are calling for a major correction and a return of the bears. I like your perspective on things.
Hello Mike,
Really enjoy your clear, no-BS blog. I've been trying to develop some simle trading rules to check trades before going in. I'm talking about swing trading: anyting from a few days to a few weeks. I'd appreciate any comments on them:
What is the 20 day ema showing?
What is the 50 day ema showing?
What are daily candlesticks showing?
What is daily MACD showing?
What is daily RSI showing?
What is the 20 week ema showing?
What are weekly candlesticks showing?
What is weekly MACD showing?
What is weekly RSI showing?
What is bullish percent index showing for the sector (if applicable)?
Those make sense to me. Just make sure you know which time frame is your primary one. My worry is that you get conflicting signals with all those indicators and end up never taking any trades.
That's a fair point and a good one. I think if it means fewer trades that's no bad thing. Some of the reasons for these rules are:
a) Gurus like Elder are very insistent on looking at 2 time frames. In fact, in Entries and Exits, he goes so far as to say that a swing trader should look at the weeklies before the dailies.
b Looking at the longer time frame helps to filter out market noise on things like daily MACD, RSI, and candles.
Anyway, thanks v much for your reply and site.