Economic exercises are always fun, and provides a fundamental thesis to trade, but trading conditions are my 'thing'. Right now, the market seems tired, and is pretty overbought. Intra-day action also suggests 'toppiness'. (Although listening to cnbc via the web, Cramer and the fast money crew pretty much feel the same way... so I ain't saying nothing new.)
But here is where I am coming from...
The SP500 is overbought, and since markets do not go straight up, a good short-term trade would be to play the consolidation.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhpup9w5dcpVlha0bkV8cDyfQauTNg9xAYOc5L7tAVkOz38PYHXBOBQlRwkMGQrrJFXumwXA27OMgHTRcbx0UIoiLGhostsUFvz3ZnjieuRjDo-xxkSP4ukjpB2aEXTww_KW_w55ayeTpE/s400/sc.png)
I am expecting an ease in the overbought condition. Underlining conditions are still pretty bullish, so I would be surprised if 1000 is broken downward from this consolidation.
Another clue to the consolidation, is the Naz. It looks to have hit resistance, while being overbought.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjHyVUqdxutE133ks5xcbfA_h0B3cavWkevM5ENq-SKMBvFz60JaEZqYVjsO__KTPGrRqeVL5GnBnTD6YPZugeHjX3Pw8kDF3W3cAJHuJdwzB-LYkrYhbbNYfUJqlNwBKWbsUsk1I6okrY/s400/sc-1.png)
If the Naz continues to march passed the resistance, the markets may just consolidate while moving upward. But judging my the Asian and Pre-market action, I doubt it.
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