Here’s what to look for in the action today…
The S&P 500 Index had a terrific bounce off of support yesterday. The index popped 20 points higher, recovering everything it lost last Thursday. And the Volatility Index (VIX), used to measure market risk, triggered a new “buy” signal. So we should be ready to rally to new all time highs.
But something just doesn’t feel right…
Here’s an updated look at the S&P 500…
The S&P rallied right back up to the resistance line of the declining channel pattern. It’s also bumping into the resistance of its 9-day exponential moving average (2,349) and its 50-day moving average (2,353). This is a logical area at which to expect some selling pressure.
If the technical conditions had gotten more oversold last week, when the S&P was testing support, then I’d be more confident in the potential for a rally to new highs. There would be plenty of energy available to fuel such an advance.
But we never got “extremely oversold” conditions. So I’m reluctant to bet aggressively on a big move higher.
I also don’t want to hold short positions right here. We’re in a seasonally strong period for stocks. And we have a new buy signal from the VIX. Short trades are likely to suffer.
At the same time, though, the risk/reward setup doesn’t favor being aggressively bullish. A few long-side trades is probably a good thing. But traders should avoid getting too bullish until the S&P can get decisively above its 50-day moving average.
Here in my Market Minute, we take a look at how the markets are setting up every morning, and get you positioned to start the day. If you’re not an active trader, I’ll show you techniques that’ll make you a far better investor.
If you are an active trader, you’ll get the inside scoop on the most important trends to watch… and ideas for boosting your returns.
You have my take on stocks today. As for gold…
Gold and Gold Stocks
There’s not much going on in the gold sector at the moment. Gold stocks pulled back a bit yesterday as expected. I’m still looking for slightly lower prices over the next week or two to set up a better entry level for new gold trades.
I’ll update regular readers on these trends throughout the day on Jeff Clark Direct.
Best regards and good trading,
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