in my last post (2 trading days ago due to the shortened Thanksgiving trading week), I suggested a bounce would be coming and today we clearly received it. I think Thanksgiving week with the low volume associated with it delayed the bounce, but it came today and it came big … up almost 3% on all indexes.
Looking strictly at price action today, about an hour before the close of the day, we made the low for the day and the market quickly bounced from there to close at or near the highs of the day. This sends a strong signal that the large players want this market to go up. Just an hour ago, my feeling was entirely bearish, but with price closing at the high of the day, I am now getting conflicting messages.
My end of day analysis is mostly bearish in nature, although certainly looking better than it did a few days ago, but bottom line this is not a market to buy … in fact if I were forced to put money on the table I would short at this point.
The SPY had fallen a little over 10% from the October 27 high in the market, and today it gave back almost 3% of that. Usually after such a large decline, time is needed to heal wounds before people decide to get back into the market … we have not had that time at this point. My assumption is that we will either take two routes over the remainder of this week … either we will continue the decline to test the lows of the year OR we will consolidate and sit around where we closed until the bulls can get more courage to push prices higher again.
We have A LOT of overhead resistance … so it is going not going to be an easy task to push prices higher.
With that said, with the year coming to a close fund managers are going to be trying hard to get their funds outperforming the indexes and as a result, bullish tendencies will probably occur. We also have the seasonality bullish bias as well … usually November and December are the strongest months of the year.
Lots of mixed signals and confusion.
Needless to say, I closed my long positions that I opened on Tuesday and Wednesday and took my profits off the table.