Today the market jumped up forming a triangle consolidation pattern after nice rally. We bounced off of the lows in October and had very wild and extended rally. Although I didn’t believe in this rally due to fundamental underlying data, this consolidation may change everything and we are truly forming a new bull trend. Every time news from Europe hit the market, buyers step in and hold the key levels at 1,220-1,230 zone buying back in.
So what can we expect now? After an extended rally like in October this consolidation pattern is a good sign that this rally is healthy. Most likely we will break up. For me that would be changing my strategy from bearish into bullish, looking for trades moving up. I will also be adding SPY calls to my portfolio.
I must admit, that this last quarter wasn’t much successful to me. I missed the rally and my bearish trades hurt my account. I hope the next quarter will be much better.
For this new development in the market, I am changing the market status to Rally Attempt. However, in the market everything is possible and we still may see drop if Europe fails to handle their debt crisis.
Happy Trading!
Do you think we are in rally? Can the market go down now and consolidate last day’s huge rally? If so can that be considered a buy point? Or are we going further down? What do you think?
I think, we will consolidate now, maybe a little choppiness or going back down to 50 day MA and then maybe back up. If that happens, we really bottomed and are in a new bullish trend. Let’s see. When you take a look at bad news from Europe, we no longer react on it with huge drops as previously, so it looks like it is already priced in. The only bad news can be if the Euro zone fails and breaks up. Then we may see a broad sell off. Hope this won’t happen, since no one can afford it and central banks will do whatever they can to prevent it, so I think we may see this market rise.
It looks like the market is in indecisive position going sideways. This rally may fade as quickly as Europe announce more problems with debt. Right now it seems that Euro may actually bankrupt and if that happens it will be a terrific catastrophe. The rally will end because this will drag the US market down deeply. I wish I would knew when that happens!
Looks like the market is no longer consolidating. Today it broke down sharply. SPX and Dow Jones will tank.
I wouldn’t be so sure on this. The market is still in bearish territory and if the European mess gets worse (and I think it will, since investors seem not to realize the depth of the crisis) this market will slip down terribly. Nobody is realizing how deep all the banks are connected together by those bad bonds, nobody knows how much the US banks bought of those bonds for example and when this blasts, it will be a big noisy burst. Also look at today’s market move, it still is showing a turning down direction. So you have two options here:
1) stay away and watch when this mess gets away (but that may take a long time as Merkel mentioned today) or
2) trade it actively, but be careful