The Stock Market – What I am doing…

Friday’s late day, almost unbelievable rally, has set up sort of an if then, but if not, then this type of scenario.  So instead of just posting levels I am watching I will post what I am doing and what I am watching in the stock market.  Keep in mind this is not advice, nor is it a recommendation to buy or sell.  It is simply what I am doing…

I trade completely based on levels on the charts. And Friday’s market obviously was rather interesting. I had support pegged at just above 1052 and at 1045 on the S&P (see Markets Around the World Sell Off), it moved through the first and aggressively bought off the latter setting up a bullish daily candle – or so it would appear.

But this market is correcting overall. I remain bearish until 1104 is taken out. That is a ways away, but on the way to that level I am watching 1074, 1085 and 1091. Movement up through one has me consider that it is likely it may move to the next. 1085 and above begins to pull me to more neutral, and not biasing short positions. If that were to occur, I would need to see move back down below 1074 to get me biasing shorts again.

Those are the bigger levels I am watching overall. Intraday I use simple trendlines after about the first half hour of trading to zero in on reversals in the short-term (see Trading These Stock Market Swings for more info). Positions are taken aggressively on the short side when intraday trendline is down. Smaller positions are taken on upward intraday moves with upward sloping trendlines.

Very swift moves to the upside like what happened on Friday are pretty rare without some known catalyst such as news or the like.So it warrants caution, but does not indicate a reversal.

Very near support is at 1063 followed by Friday’s low near 1045.  Nearest support beyond this is at 1030.

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Have a great weekend,

Cory Mitchell, CMT

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