Friday the stock indexes poked below support and reversed to close higher and above the support. That occurred as the S&P 500 touched the 50 day moving average and then reversed higher. I have talked about his before, but there are often false reversals at key moving average levels like the 50 day MA when a new trend has begun. I believe that there is algorithmic trading triggered to buy at those moving averages which at first touch causes the reversal. However, it may just be a short term blip rather than a legit reversal. In a case like this, I personally don't give the reversal as much credibility as I may normally.
So what we saw today was the S&P gap lower and move below Friday's low. This may be an indication of a new downtrend. A failed bullish set-up may be a harbinger of a larger bearish trend. Now, the hourly chart may show some bullish divergence soon, and could still result in a rebound, but an acceleration down from here probably indicates the intermediate trend is confidently down.
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