Friday, July 02, 2010

S and P In Downside Range Expansion

The S and P 500 is in a pronounced downside range expansion.

The market continues to trade down below the area bounded by -2 standard deviations under the line.

The line is now dropping about ten points a day, and currently picking up momentum. Until the range expansion is "rubbed off" this pattern will continue.

Traders should avoid selling the market when it is at or below the -2 band (currently 1012.00). In fact, fast traders should cover shorts or go long for trades on sharps spikes below the line.

A sharply lower opening on Tuesday would probably be a good short term trading opportunity -- buy. Prices under 992.50.

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Original content Bob DeMarco, All American Investor