Is The Selling Done?

After five days of selling, markets managed to bounce a bit today.  Yesterday, stocks plunged mid-morning, sending SPX down to test 2000.  Soon after, buyers started to trickle in.

Taking a look at the indices and the sector ETFs, we see that financials and biotechs led the market bounce:

XLF (financial) was up +1.05%, while BTK (biotech) was up +3.01%.  PBJ (food & beverages) jumped +2.14%.

Restaurant stocks were really strong today.  LOCO was on its 3rd-day of rising, adding another +5.86% today.  CMG vaulted $30 in one day!  CAKE also broke higher with a +3.77% rise.  Among beverages, MNST stood out, soaring another +3.28%.  GMCR popped +4.58% on a deal with Dr. Pepper Snapple.  Our exit on GMCR puts was timely:

GMCR Jan 17 2015 Put 130.0 10.0 $4.60 $1,425.00 44.88% 01/06/2015

The Dow was up +212.88 points; SPX added +23.29 points; Nasdaq gained +57.73 points:


SPX added +23.29 points to close at 2025.9.  Its daily MAs and MACD were lower.


Nasdaq gained +57.73 points to close at 4650.47.  Its daily MAs and MACD also slid.

The selling in the past five days have been so strong, even though the market indices were up more than 1% today, their respective daily MAs and MACD were still sliding lower.

If this market is going to turn up from here, I think it will take a few more days.  The daily MAs are still pointing down.  The momentum from the 5-day selling is too strong to overcome by just one "up" day.  SPX has resistance now at around 2040-2050.  

We have jobs data coming out tomorrow and Friday.  But, I don't know if the numbers are going to affect the markets much either way.  If the numbers are lower-than-expected, it could mean that the Fed could hold off raising interest rates a little longer.  But, does it mean that the economy is not as strong?  On the other hand, if the numbers are stronger-than-expected, it could mean that the Fed could raising rates sooner.

So, the charts are already telling us what people are thinking.  The opinions are mixed, and the market will likely be, at best, range-bound. Let's not chase this bounce and have some downside protection.

Good night and HappyTrading! ™

Posted to Ecstatic Plays on Jan 07, 2015 — 6:01 PM
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