Keep Your Seatbelts Fastened - It's Gonna Be a Bumpy Ride

Includes: IVV, SPY
by: Apple Investor

Ok, I know. I got all geared up, getting set for a Bear-back ride, and what happens? I discovered the big nasty Bears aren’t big and nasty after all, they’re Teddy Bears. You would think that if you’re out in the Wilderness, and you’ve prepared a plate consisting of a bankrupt financial sector, a commodity conundrum, a burnt out tech sector, and economic woes that occur once a decade, that the Bears would take that sucker down. No problem. Well, apparently it’s a problem for these Bears.

Sure, you’ve gotta give some credit to the Bulls for defending the 1200 level on the S&P 500 [SPX] for the third time. We almost made it there yesterday, got as low as 1211 on a gap down on the open, but the Bears were quickly rejected and denied for the remainder of the session. Then with only 20 minutes left in the session it looked like we would finish flat, the Bears got up in a bunch and covered their shorts. The markets rocketed into the close. So I guess all in all, it was a good thing that we were all geared up, because it sure was a hell of a ride.

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So, what does that mean from here? Is the market going down, or what? The fundamentals and technicals all say it should have, and it may do so in good time - we are after all still waving the bear flag. But for now, we bounce. The big questions are; “How high?” and “How long?”

Immediately ahead for the S&P are the 20 and 50 day moving averages at 1269 and 1265 respectively. If we get beyond these levels then we have wedge resistance at 1290. If we bounce off of any of these levels, then we may have a good short prospect, and in that short we go for the wedge bottom, and possibly 1200 will give way. On the Naz we have double resistance at 2320, or last week’s gap down, and the 50 day moving average at 2323. And then above that we have the 20 day moving average at 2347.

This bounce, if it does in fact occur, will be very telling on how the next move down will be defended. If we have a strong impulsive move up, that will strengthen the MACDs, making the next move down an easy mark to defend for the Bulls. If we have a retracted move up and the MACD gets weaker, then the next move down may be the one to take out the floor.

Disclosure: Short