This morning I have been busy over on my twitter account which anyone can join (shameless plug for my twitter) as I trade the Spy Put Options and the DXD. Lots going on and in the Spy Put Options some exceptional profitsl The S&P though is still trending lower and a challenge to the 1840 level may be in the works still.
Market Direction Chart Intraday
I want to show this chart from noon to around 1:00 which shows what is happening in the S&P. You will have to select to enlarge it. In the chart below you can see how choppy the market is but overall the choppiness is still leading stocks slowly lower. You can see the pattern of lower highs with each little fight back. The S&P needs to break through the 1851 level convincingly and then take out the 1852 to break today’s trend and set up the market for sideways moves for Monday.
Select to enlarge
Yesterday’s Carnage
The drop yesterday cannot be undone in a single day. The market needs baby steps to be able to rebuild investor confidence. That means holding support lines at 1840 and then building secondary support levels at 1852 and then 1865 and finally back at 1870. Those light support areas have to be retaken in order for investors to return and place their capital back at risk.
These are small stepping stones to rebuilding confidence and setting the market for higher moves. Whether it can happen over the next couple of weeks is anyone’s guess at this point, but when investing it is always best to take things in small stages and not think too far ahead.
Right now the area to concentrate on is the 1840 support. That area marks to most important level at this time. If it breaks then the next level with any kind of support is 1825 and from there 1800 and then 1775. Those are all lighter support levels but they will slow any descent especially in what is still a bull market.
Don’t Buy Into The Bear Side
Bull markets correct all the time. Don’t buy into the bear side of the market until a bear truly emerges. Lots of bull markets trend sideways and can do so for months and even more than a year. Choppiness and plunges here and there are not bear markets. It takes time for a bear market to set itself up. There are always signs and for investors lots of opportunities to earn profits and set up protection for a true bear. Instead remember that bull market corrections are what is needed to shake out investors and set up some exceptional profit making trades. For those of us who sell options these are the types of markets that can compound returns quickly.
Market Direction Outlook Into The Close For March 14 2014
The Dow yesterday broke strong support at 16200 with ease. That shows the nervousness of investors. For the S&P it will need to test the 1840 and hold it to convince a lot of investors that they should be back risking capital. Yesterday I would have thought bonds would have been up and performed better. That shows there is still not enough fear in the market and a lot of investors are looking at this pullback as a possible one day event. A push down to 1840 and a couple days of testing would be more convincing.
Into the close for today I believe the choppiness will continue and the market direction will remain down. That said it would appear at present that any close although I expect it to be negative, won’t be overly strong to the downside. Monday will be most interesting.
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