Yesterday the S&P 500 opened above the 200-day MA and I listed 5 things I wanted to see. I did not see any of them early on and it was obvious after an hour of trading the breakout was a fake. Here is the list.
- I want to see the early gains hold steady. I do not want to kiss the 200-day MA and then back off 20 S&P points. We need to stay near the high of the day for an hour. That will tell me that buyers are in control and that they have been able to offset selling pressure.
- I want to see a deep trough in 1OP while the market treads water near the 200-day MA. That will be a bullish divergence if we get one and that will signal that a breakout on the next bullish cross is likely.
- I want to see strong performance in big tech names with stacked green candles and continuation even when the market rally pauses. These stocks have been beaten down and they have lots of upside room. From this level they should be able to stack green candles…. If the move this morning is legitimate.
- I WANT TO SEE SOME DAMN VOLUME!!!
- I want to see late day strength and a close above SPY $450.Swing traders with a longer term perspective should stay sidelined. The price action yesterday tell us that the market remains directionless.
Day traders should expect follow through selling this morning. The market will not stage a decent rally until support is confirmed.Support is at $435 and resistance is at the 50-day MA.