It is not unusual for the a severely down sloped market to see a sharp two day contra trend rally. We are seeing that right now in the S and P 500.
Savvy short term traders should look to sell any rally into the 740-750 range on Wednesday night or Thursday. It is always a good idea to sell after two days up in a downtrend. Remember to limit your risk.
The inside day after the bottom, followed by a hook up does warrant some caution. It is possible that we could see an extension of the rally after a short pop down. The more significant resistance in this down trend is up above 800 right now.
The down trend remains intact. Those selling rallies in this monster downtrend that started in September have done very well. However, the downtrend has been in force for several months, and has come a long way. As the S and P 500 extends to the downside, selling the market becomes more risky. The easy money has been made on the short side time for the time being. Johnny come lately traders should keep this in mind. Savvy traders should be taking less risk in their trades at this point. This is not the time to get greedy or to get carried away with the madness of the crowd.
Savvy short term traders should look to sell any rally into the 740-750 range on Wednesday night or Thursday. It is always a good idea to sell after two days up in a downtrend. Remember to limit your risk.
The inside day after the bottom, followed by a hook up does warrant some caution. It is possible that we could see an extension of the rally after a short pop down. The more significant resistance in this down trend is up above 800 right now.
The down trend remains intact. Those selling rallies in this monster downtrend that started in September have done very well. However, the downtrend has been in force for several months, and has come a long way. As the S and P 500 extends to the downside, selling the market becomes more risky. The easy money has been made on the short side time for the time being. Johnny come lately traders should keep this in mind. Savvy traders should be taking less risk in their trades at this point. This is not the time to get greedy or to get carried away with the madness of the crowd.
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 Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments. |
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