Monday, January 11, 2016

Extreme Stock Market Position Update

In the short term, stocks continue to push lower in the face of extreme technical set-ups.  If today closes below the lower Bollinger band on SPY, that will be 4 days in a row, which is pretty rare and is further suggestive of a sharp snap back rally in the days to come. 

On the 30 min MACD chart of SPY there is a pronounced bullish divergence as prices have grinded lower the last few sessions.  To me this suggests that the short term climate is ready to rebound, though over the coming weeks and months, this environment seems likely to be a second leg down in bear market which could be substantial.

The statistics from historical comparisons are so short term bullish right now that I feel I HAVE to take the opportunities even if they seem to be counter trend.  However, I plan to make some scans on short term rebounds that filter for established downtrends so that opportunities for trading a bear market trend are identified.

Pete

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