S&P weekly consolidation in progress; bears prove controlLast week was marked by hectic price action in both directions. Bulls failed to set a daily low for two consecutive days (Monday-Tuesday), which logically led to a strong bearish attack. Then something peculiar happened – the price pivoted near the previous low and went up during the overnight session. The market opened with a huge gap on Wednesday, held the open, and even managed to rally further in the regular session. I can only imagine how many short traders, who had done everything right, suffered from this.
This price action also confused many long traders, including myself, by making us believe that the weekly consolidation was coming to an end. But Thursday turned the board 180 degrees again with a psychotic bearish move, wiping out more than 2% of the market value. Again, as with the bullish rally, there was no obvious trigger unless you believe that PMI data could wield such importance.
At this point, we have the following disposition:
1. The market is still in a weekly uptrend. Until sellers take down the previous major low (491), nothing changes in this regard.
2. Bears have proved strong control over the weekly timeframe. We should respect this.
3. Bears were also able to start monthly consolidation, another sign of their strength.
All in all, I wouldn’t consider any long-term “buys” until bulls manage to set a convincing weekly low, even then with caution. Shorting is an option but is very tricky in light of what happened last week.
Disclaimer
I don't give trading or investing advice, just sharing my thoughts.
