The opening this morning might have caught a few investors by surprise. It wasn’t the pop that caught investors but the immediate weakness which suddenly brought out sellers who pushed the indexes into the red. Let’s take a look to understand what was seen this morning.
SPX Market Direction Outlook Intraday
The 5 minute intraday morning chart below shows the opening pop. Investors were enthused by the earnings from Apple, Facebook and Caterpillar. The chart below shows the problem that the market faced this morning and why I had indicated in my morning comments yesterday that I expected a pop in the morning and then weakness and then a push to a positive close.
The close on Wednesday was weak. But investors were enthused this morning and bought in pushing the market to a big opening pop. This is typical on big earnings days when the earnings support a belief in higher valuations. The problem though is the weak close from the day before. That close almost always means at some point we will see the markets retest lows. Sure enough, the morning saw an instant response to the big opening pop and sellers jumped in. The market sold off and punched through the Wednesday close. That brought in bargain hunters who have been pushing the market back higher. The key to the market for Thursday is to watch the higher highs and higher lows. As long as they hold the market will continue to remain positive. That means the S&P this afternoon cannot break through 1878 on the high and 1875 on the low. If it does then look for a close that is perhaps just marginally positive.
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