Market bouncing on its support, will it survive?

A few days SPY was bouncing on the $112.5-ish level. When looking at $VIX which is at the very elevated levels and considering today’s price action at the very end of the trading day (see the volume and price on any daily chart) I would assume the market was showing some exhaustion on selling. Therefore I decided to close my puts position as I mentioned in my previous post and now I will wait for the next move. Will the market break through and fall down or will this support hold and we move up? I do not know. From the technical analysis perspective we are due for a bounce. If we look at the chart, we are probably going thru “A,B,C correction” in a bear market. We accomplished the “A” wave and now we may be touching a “B” point. If that is correct, the next move will be up to some $127-ish level and then we resume the downtrend.


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Why?

Let’s take a look at the nearest trend, let’s say 6 month chart. There is a plenty of traders who purchased SPY at $130 – $136-ish levels and these people are waiting to get break even. When the market gets there they will sell. It is a large overhead supply waiting there. Considering that we are in bearish market, more downtrend is imminent.

Well, of course, it may not happen and tomorrow the market may break thru $112 on high volume and continue south. If that happens, we will see a fall all the way down to $100 level and in such case I will buy SPY puts back. Now I decided to sell to take nice profits and wait which direction the market decides to go.





4 responses to “Market bouncing on its support, will it survive?”

  1. Reimer says:

    I think the stock market will be trending upwards now.

  2. Ronaldo says:

    There are some interesting points in time in this article about stock market but I don’t know if I see all of them center to heart. There is some validity but I will take hold opinion until I look into it further. Good article , thanks and we want more! Added to FeedBurner as well

  3. Gordon says:

    Great article about stock market with quite interesting information. You could follow-up to this particular topic!?!

  4. Jack says:

    Aw, this is an interesting post about market insight and trading stocks. In thought I must put in writing like this moreover C spending time and actual effort to have a great article but so what can I say I procrastinate a lot and for no reason look as if obtain one thing done.

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