Monday, September 13, 2010

Stocks - Where Do We Go From Here


The stock market gapped higher today and was supported by buyers throughout the day. The S&P is now at a pivotal area meaning that the next few days will most likely forecast where we will go from here.

In the above daily chart of the S&P, you can see that the market is now at solid resistance while in an overbought condition. Usually when we have this combination the market reverses as traders take profits right into resistance after such a significant move up.

The bullish argument is that there is a large inverse head and shoulders bottom that has developed over the past few months. A close above the neckline (resistance) could set the stage for more upside potential.

Rather than guess which way stocks will go, I am going to let the price action tell me which side of the market I should be on. Like I said, we are at a pivotal area, lets stay awake!

1 comment:

Anonymous said...

While SPY is siting at the resistance area, AAPL pierced that with no problems. I also follow EEM that I consider leading and it's making higher highs. Thus, I'm 100% long.
Jack

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