Monday, September 5, 2011

Bellow major resistance level

SPX finished the week bellow the major resistance level around SMA75 on weekly chart (1215). It looks like market is going south from here and most likely we are going to see new lows. EMAs are touching on weekly chart but no crossing yet (if you really zoom in you can argue that they are already crossing a little bit).

On intermediate time frame we still have a bullish EMAs crossing on both hourly and two hours chart but SPX is bellow SMA 120. On two hours chart SPX barely managed to climb above SMA 120 last week but immediately fell bellow. Please notice that DMI has turned negative on two hour chart. As I warned you last week when two conflicting trends emerged on different time frames my bias was bearish despite the bullish signals generated on intermediate time frame.

Let's see now how much the market is going to fell. Is it going to go towards 1120 (previous low) then up again establishing a trading range or we are going to see lower lows? With market waiting for good news from Feds this month (QE3) a trade in a wild range is not out of question but we are most likely going to see new lows, bellow 1,100.

As for stocks to short, besides the usual ETFs, QID, SDS, FAZ, TZA almost every stock looks like a good short. Usually I go with ETFs but when I see opportunities I jump on individual stocks as well.

All the best!


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