Wednesday May 4, 2016
Key Developments :
- H&S target of 204.16 remains in play, and un-captured
Today really kept me on my toes. My pre-market plan was to sell opening strength, which the market gods gave us, but the bulls are F-ing relentless. You can see above how I traded the day. It was pretty choppy out there, and really frustrating to not acquire this target yet. I’m flat once again as there is very little edge here. I would expect to see that 204.16 target acquired tomorrow, but just not going home thinking about it. I will continue to be a seller of any strength into that former trend support that I spoke about in my pre-market plan.
The other trade I will be on the lookout for tomorrow is a potential undercut type reversal. That would be maybe a gap down and then a push to acquire our target, followed by short covering as today’s low is regained.
This could be a missive move higher. So I would be very careful shorting below today’s low as this potential risk exists.
Additionally, we are grinding into an area of a ton of price history/support with the S&P almost oversold. So we should not be surprised by a nasty bounce higher to retest the 2100 area. Very similar to what we saw back in November/December.
The Bottom Line:
With the market grinding into our target of 204.12 on the SPY and oversold conditions, be on the lookout for a rally higher off the target acquisition. Tops usually take time and although I am in the mindset that the high for this bear market rally has been set on 4/20/2016, I’m seeing very little conviction selling to this point. At this point, I will be looking to sell strength until that target is acquired, but will then look to be long for an oversold bounce. The bears have not done enough technical damage in my mind as of yet so be careful with being aggressively short as we are close to the target.
Chart of the Day:
I posted a mini blog post on CMG today. Worth your read.