This month has been the month of a failed rally as today the S&P 500 opens up right on it’s 200-day moving average. I’m hoping it can bounce off of this level again to give people a chance to plan more over the weekend and even make some selling decisions if they have to.
First of all let’s take a look at the chart of the S&P 500 and do a simple trend analysis.
As you can see in February the S&P 500 hit the 200-day moving average (the green line) and then rallied. Such technical levels bring in robot computer buying and there is no doubt that robots are now trying to buy again.
Will they drive the market back up to the S&P 500 2800 level?
I’d like to think so, but I don’t believe so.
I’m just hoping the robot buying will hold the market up for a few days maybe even a few weeks to give people time to do their own analysis and sell their bad positions.
The situation now is different than what it was in February when the S&P 500 last hit it’s 200-day moving average.
First of all that rally failed to make new highs as it came AFTER the DOW 10% drop.
The Nasdaq made a new high, but it just came back down for a false breakout and now many off the big cap tech stocks are badly lagging.
The simple fact that the last rally failed suggests that the next one will too. Really we probably won’t see a real rally now until there is panic in the market. Many people are still complacement and some are even on margin.
Since the DOW dump I actually am now shorting individual stocks on the rallies and that is what is working with the stock market.
For instance I shorted TSLA and it collapsed.
The best stocks to bet against are POS stocks with massive debt loads and shady management.
TSLA fits the bill and as you can see it crashed more yesterday.
I really believe that the number one thing people need to do in this market is reduce risks. That may mean for some people selling a few things.
It also means being more careful and no longer doing the type of trading that worked last year, because we are now in a very volatile market with big swings that is only just beginning.
I talked about the market trends with David Skarica of addictedtoprofits.net after the close yesterday in a live session. You can watch the recording here.
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One of the things I said in the video was that people using margin debt to leverage MUST GET OFF THAT MARGIN!
It is margin maniacs who make panic dumps happen in the market and going into the January peak the market generated the largest amount of margin debt in it’s entire history.
So these guys are fun when the market goes up as they keep buying, but cause a mess on the way down.
And so that is what we are facing now.
There is no systemic crisis like 2008 about to explode on the markets.
It’s just too many nuts going on margin with no plan on when to get out except to sell when they get crushed.
And then you have people who just chase only because something goes up and there is hype.
There were stock market people who were actually making fun of Bitcoin players for doing that last year, but how many stock traders who bought TSLA ever looked at the balance sheet?
Really I’m glad the market is going to be closed tomorrow. We all need to take a deep breath from the wild action, analyze things, and then make the decisions we need to move forward.
Let’s hope for a bounce.
They say you should never hope for anything in the markets – but I wonder why not today?
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