Tuesday, December 07, 2010

Stocks Gap Higher But Close On Their Lows

Today the stock market gapped open higher but was met with selling which continued throughout the day. As you can see in the above chart, the S&P500 opened at a new high for the year but ended the day closing on the low. Being that I am long stocks, I am not too happy with today's price action.

In the lower panel is the RSI indicator which is now showing a "POTENTIAL" bearish divergence.  I stress the word "potential" because this bearish technical setup is NOT confirmed.

Here's how I am going manage my current long position in the market. If stocks continue higher, I will stay long but if I see weakness such that the lows from last Friday are taking out, I will exit a portion of my long position and then look to get back in on the next dip. Lets see how things unfold.

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