i still plan to update and highlight some of the existing trades as soon as i get a chance. however, as all eyes are most likely on the broad markets right now due to their precarious technical posture, i have updated the key index charts posted last night as well as several others that have been covered lately. the bottom line is this: the markets are bouncing today in spite of some clearly negative economic data. from a technical perspective, the bounce shouldn’t come as a surprise as the markets were very oversold on the short-term frames and more importantly, as highlighted last night, some of these key indices, such as the $SPX & $DWC, closed right on or a hair above critical support.
looking at these charts in aggregate, i still believe they paint a picture of additional downside in the near-term (no later than early next week…probably sooner). essentially what the charts below show is that two indexes, the $SPX & $DWC, have so far defended critical support and bounced, thereby dragging the others higher with them. net net; a bullish event. however, as the other three key index charts show (the $SPX equal-weighted index, the QQQ/$NDX and the nasdaq composite), prices have already clearly broken support and are now retesting those former support levels (i.e.-resistance) from below.
as this important battle between the bulls and the bears can go either way, this looks about as good a time as any for those in the bearish camp to be shorting or adding shorts at current levels with the appropriate stops in place overhead. on the flip-side, those in the bullish camp couldn’t as for a much better level to add some long exposure, with stops not too far below yesterday’s lows (if trading the broad markets that is, otherwise stops should be position specific).
