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Green Zone Successfully Defended by the Bulls, Bears Dropped the Ball

The Q's successfully defended the bottom of the "Green Zone" so far with an impulsive reversal that coincided with the SPY reversing off that Feb 17th gap & the Q's doing the same after a very brief & minor overshoot of the 2/17 gap. This is likely to have more lasting near-term bullish implications although there are still plenty of mixed signals regarding the near-term outlook for the equity markets right now. My near-term bias remains cautiously bullish and only a break down into the red zone would change that for the time being. Previous & updated 60-minute charts:

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Feb 24, 2016 2:32pm|Categories: Equity Market Analysis|Tags: , |7 Comments

7 Comments

  1. Art February 24, 2016 2:46 pm at 2:46 pm

    thanks for the chart Randy! I would not be suprised to see the market try to regain the 1950 area before the next big drop, not saying that is high probility but a head fake in this area we are presently in would not be supriseing in the least.
    Also it would be a gift to be able to short into.

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  2. Kstellish February 24, 2016 2:57 pm at 2:57 pm

    @rsotc looks like the miners are finally topping. Pretty wicked candle. MACD curling.

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  3. Teeps01 February 24, 2016 3:21 pm at 3:21 pm

    Great chart Randy. Kept me in my long trade near the bottom even though I had pulled the trade trigger a little early.

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  4. rsotc February 24, 2016 3:24 pm at 3:24 pm

    @art A run at 1950 & even 1990 may very well be in the cards. I’m still keeping it light and for those that are new to RSOTC, lest my recent bullish bias & lack of short trade ideas come across as if I’m anything resembling a perma-bull, let me just say that I have always been as comfortable, and as adept, at shorting stocks as going long. Quite a few here even traded alongside me throughout the 2007-2009 bear market which I navigated both long & short extremely successfully.
    I would also love to pile in short for the next plunge but one thing that I learned over the years is that although shorting stocks provided for larger gains in faster order that going long (recent ramp in GDX/NUGT being an exception to the rule), your timing must be honed much more when trading the short side vs. longs. Get short too early and you are more likely to be stopped out than if going long on a stock too earlier. More importantly, stocks usually reversal very hard & fast once a support/price target is hit when short as you have the combined effect of both natural buyers stepping, lots of shorts covering, and then the institutions that sniff out a highly shorted stock and use their muscle to squeeze out the remaining shorts, even if just for a temporary but strong pop.
    Although I don’t have a firm plan in place at this moment regarding the broad market (meaning miscellaneous individual positions & quick trades aside), I’ll likely be moving back to a sizable net short positioning on either a move up close to the bottom of that late 2015 trading range ($NDX 4485ish & $SPX 1990ish) -OR- a move down & break into that red zone posted in the QQQ 60-minute chart above. That could all change on a dime but that’s my current rough plan for now.
    One thing is for sure & that is the fact that we’ve been in very choppy & wide range since early January with the broad market trading today right about where it ended the first week of the year. The trading range over the last 6 or so weeks, although we’re right about back to where we started, has been marked by that big W pattern in the broad market.. 2 big legs down & 2 big legs up… nice for more active, nimble traders but very tough trading for most, I’d imagine. This has been & will remain an active traders market until we break above or (most likely) below the recent trading range where longer-term swing & trend traders should be able to position for the next major trend.

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  5. Art February 24, 2016 3:31 pm at 3:31 pm

    Thanks Randy for your perspective on that! It is quite a pleasure to be able to learn from and trade with you. Very much appreciated

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  6. Al- February 24, 2016 4:41 pm at 4:41 pm

    I’m new here. Wow do I like the work Randy here does, plus great comments on the members

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  7. Cantrip February 24, 2016 8:46 pm at 8:46 pm

    Thanks Randy. I too had gone long for a few quick trades, and was just about ready to close them out, when I noticed your posting this morning. I let things ride, and am now $ ahead. Thank you!

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