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Deron Wagner is the founder and portfolio manager of Morpheus Trading Group. His daily focus is managing and trading the Morpheus Capital Hedge Fund, which he founded in April of 2004. He also teaches his swing trading strategy with The Wagner Daily newsletter, which provides exact entry, exit,... More
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Advanced Technical Analysis of ETFs
  • How High Will The Nasdaq And S&P 500 Bounce Before Hitting Resistance? 0 comments
    Nov 12, 2012 10:23 AM | about stocks: SPY, QQQ

    Last week's bearish price action caused the main stock market indexes to plunge through major levels of technical price support, including key moving averages and prior "swing lows." Now, those technical levels of prior price support will act as the new levels of price resistance on any rally attempt. This is because the most basic tenet of technical analysis is that a prior level of support always becomes the new level of resistance, after support is broken (and vice versa).

    Since last week concluded with a modest rally attempt on November 9, it may have been the start of a significant counter-trend bounce. However, with an abundance of overhead supply now in the broad market, it would not be long before benchmark indexes such as the S&P 500 ($SPX) and Nasdaq Composite ($COMPQ) start running into new overhead resistance levels that could easily stall any decent rally attempt.

    In the 3-minute stock trading strategy video below, we use simple and objective technical analysis to highlight pivotal price levels where both the S&P and Nasdaq could run out of gas in the near-term if stocks start bouncing higher in the coming week. Click the link below to watch this short technical analysis video:

    How High Will The Nasdaq & S&P 500 Bounce? (video)

    If you use direct access stock trading software, it may be a good idea to set price alerts for the S&P 500 and Nasdaq Composite at the resistance levels mentioned in the video. Doing so will enable you to be instantly notified when the broad market inevitably enters into a counter-trend bounce and eventually starts bumping into technical resistance levels that will likely be difficult for the broad market to overcome in the short-term.

    Despite persistent weakness in the stock market, our Wagner Daily swing trading service is currently showing unrealized gains in 5 of its 7 current swing trades (primarily inverse ETFs and short stock positions). If you would like to protect your valuable capital in a weak market, while also learning to profit from trading in a down market, sign up for your risk-free trial subscription today at http://www.morpheustrading.com (less than $2 per day based on annual subscription rate).

    Stocks: SPY, QQQ
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