Thursday, July 15, 2010

Flat day

Bullish reversal day with no particular significance since the market has already advanced significantly but I bet bulls liked the price action especially the "smart money" buying at the end of the day. Personally, I would prefer to see market closing lower, 15-20 points towards the downtrend line, where some "weak  money" are going to sell, giving bulls more ammunition to conquer very important levels, 1105 (former 1067-1105 trading range) and eventually SMA200 that is around 1113.

SPX climbed a bit above SMA50 today for the first time since the beginning of the plunge, another sign that market gets strength on longer time frames.We did have a fake break out three weeks ago when SPX climbed above the 1100 resistance level and SMA200. Now the long term momentum is a bit better than back then but on short term market is overbought a fact evidenced by a briefly intra-day negative DMI on 60 minutes chart. Once again, bulls should welcome a retracement towards the downtrend line but that level needs to hold once touched.


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