The S&P 500 and DJIA showed great resilience today. After a sharp decline to open trading and volatility throughout the day, the bulls were able to wrestle control in the final thirty minutes. The Nasdaq and NYSE closed lower, but rallied off their lows during the end of the session. I want to focus on the S&P 500. The daily S&P 500 chart shows potential for a bounce off of lower resistance in the trading range in which its been trapped for several weeks.
Short-Term S&P 500
Although the SPX was unable to regain its 50-day EMA, the price pattern is favorable. Today’s price formed a Hammer Candlestick pattern. The hammer candlestick pattern is often sign of a reversal in the recent trend. The recent trend, in this case, is a several day decline. However, this pattern requires confirmation. Technically, we need to look for tomorrow’s open to be higher than today’s close to confirm the reversal.
This unfortunately doesn’t bode well for recent setups on the inverse ETFs that were discussed over the weekend. The trend remains range bound, and the SPX maintained its support and formed a positive pattern to keep the range, but there remains some weakness as the SPX coulnd’t retake its 50-day EMA. Wait for tomorrow’s action to confirm market direction.
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I am an amateur trader and investor with over 15 years experience in the stock market. I was bred to be a fundamentalist and followed fundamental analysis until 2009. Following the 2007-2008 bear market, I began to shift from a buy-and-hold strategy to trend-following techniques.