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Where is the market going? A bounce or a new trend?

Today morning I opened SPY calls position thinking the market is going for something big, maybe a reversal and better performance.

When you check MACD, you can see a divergence of the current trend and the indicator. That may be a sign that this downtrend is weakening. And that was my initial reason for going bullish.

However, when looking at what is the market doing, the price performance is mediocre. There is no steam, no power behind the move as we could see yesterday. My only concern when I was opening this position in the morning was that we are close to 50 day SMA and that may be the resistance this market won’t be able to overcome.

Apparently we are stalling at this level. The true resistance would be at 121 level, which we have touch slightly today, and since then we are heading down. Now this market looks like a bounce only which won’t change the course of the overall trend.

That’s why I decided to close my calls and wait before re-entering SPY positions. On Friday, we will have an unemployment report, which may move the market either way. Based on that I will review whether to open puts, calls or stay away.

Apparently this market is now very confusing to me and at this point I do not know how to trade it effectively. So I am staying out for some time.

Happy trading!

1 response to “Where is the market going? A bounce or a new trend?”

  1. Donald Moore says:

    Hard to say where the market goes. Right now it looks like a beginning of a new trend. Today’s move was impressive!

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