Over the past couple weeks, investors and traders have been
growing increasingly bearish on the US stock market. While I also
feel this rally is getting long in the teeth, there is no reason to
exit long positions and start shorting.
My followers know I do not pick tops and I do not pick bottoms. I
explained this in great detail in
my previous report
. There are more cons for that tactic and on several different
levels (timing, volatility, emotions, lack of experience,
addiction) than there are pros.
I will keep things simple, short, and to the point for today and
this week on the broad market. Remember, my analysis is 100%
technical-based, using price, volume, cycles, volatility, momentum,
and sentiment. I try not to let any emotions, gut feelings, or bias
flow into my projections. I say "try" because I am only human; at
times when the market and emotions are flying high, they still take
control of me, but those times are few and far between.
So let's get to the charts shall we!
S&P 500 Trading Daily Chart - SPY Exchange-Traded
(INDEXSP:.INX) continues to hold up within its rising trend
channel, and the recent pullback is bullish. Remember the trend is
your friend, and it can continue for very long periods of time,
ranging from days to weeks to months
The US Stock Market MUSCLE Indexes
The charts below show and explain my thinking. We need these two
indexes to be strong if we want to see another major leg higher in
SPDR S&P 500 ETF Trust
(NYSEARCA:SPY, or to at least test the recent highs.
Today the market opened slightly higher and push up in the first 30
minutes with strong volume. Overall, the market looks as though it
needs a day for a pause or pullback before taking another run
Small-cap stocks are the
risk-on play, and they generate ridiculous gains in very short
periods of time. I focus on these with my trading partner
exclusively at ActiveTradingPartners.com where we have been making
a killing on trades like
Direxion Shares Exchange Traded Fund Trust
(NYSEARCA:NUGT), which was up
21% in one day
), which was
up 11% in two days
Bullish Index Price, Volume, and Candles
The S&P 500 has been very predictable during the past couple
weeks for both intraday trading during key reversal times in the
market when price has pulled back to a support zone, and also for
Yesterday was a perfect intraday example: The S&P 500 bottomed
out at my 11:30 a.m. ET morning reversal timezone with price
trading at support. Price then rallied into the close, posting a
12-point gain on the S&P 500 futures for a simple momentum
US Stock Market Mid-Week Conclusion
In short, I still think stocks are the place to be, and I will not
get bearish until proven wrong. Once price reverses and the
technicals clearly paint a bearish picture with price, volume,
momentum, cycles, and sentiment, I start shorting the bounces.
This week is a pivotal one for the stock market so expect increased
volatility and possibly lower lows until the countertrend flushes
the weak position out before moving higher.
Editor's Note: Chris Vermeulen offers more content at his