These last few days have been, well, dismal. Due to the broader markets, my Apple short has been working pretty well -- but that's about it. If you're like me, you've been thinking that this market has become incredibly oversold, and we musts be due for a bounce. I hope you're not like me, because I've been wrong for days.
I think that most money managers are have been short the market for at least a month, which leads me to believe that a short-covering rally could come any day now. With that said, I think that after this new low we just put in (and we closed near session lows, which is important) it would not be good to have an up-opening. Mark my words: If there is another up-opening, market makers will sell it just as they have sold the last few. Don't get tricked into buying at their spiked prices. I actually believe that it would be healthy to open relatively flat, make our way toward the 1880 level on the S&P, and then have the shorts start covering. Obviously, I cannot predict the future; however, I believe that this market needs to bounce and it could come as soon as tomorrow. Personally I will most likely be trimming long positions after a bounce and sitting on the sidelines until the all-clear is sounded. Have you seen my new charting feature? It displays real-time data on any stock and allows for clean charting. Check it out here!
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First and foremost, I apologize for being inactive as of late. I have been swamped with schoolwork and college applications, but I am relieved to say that I have been accepted into the class of 2020 of my number one school.
As many of you know, these last few days have been anything but pretty for the market. While I believe that most investors should sit on the sidelines right now due to the volatility, the riskier investor may wish to make a bullish bet on a near term rally. I think that these last few days have made our market incredibly oversold and, furthermore, there is limited risk to the downside at current levels.
The best thing for the S&P 500 would be for an open above $200, a subsequent dip far below it (to trigger buy orders off the stochastics and RSI bottom) and a recapturing of the $200 level. If this occurs, a hammer doji will be created, drawing the attention of more traders for a swing in momentum.
But I'll reiterate that this trade is only for those who are willing to take a risk. If the SPY breaks below $200, I don't think it would be unreasonable to see $190 by the end of the year. I think that if you have a really long view (1-3 years), you can afford to wait for the volatility to shake out. |