Tackle Today: The Bounce has Arrived
February 1, 2022
≈ Does it Stick? ≈
Traders,
As I write this Monday morning, the S&P 500 is rallying for its second session in a row. Significantly, it’s pushing above the 200-day moving average and clearing critical short-term resistance. This is the best the Index has looked since the correction began earlier this month.
But it brings up some challenging questions.
– Was that it?
– Is the correction over?
– Will we recover swiftly to new highs?
We’ll know the definitive answers in a few weeks, but for now, I suggest taking things a day at a time. And rather than focusing on what we don’t know, focus on what we do.
Bear point: We know the daily trend is still pointing lower, and prices are below the 20-day and 50-day moving averages.
Bear point: We know this makes rallies suspect until the overall trend turns.
Bull point: We know this is the first time we’ve broken above short-term resistance ($442.50 & 200-day MA) since the downtrend began.
Bull point: We know this is the first legitimate two-day rally since the downtrend began.
The bull case has strengthened over the past two sessions, and the bear case has weakened. How you respond depends on what type of trader you are and your current portfolio positions.
Video of the Day: Webinar Replay – The Basics of Support & Resistance
Access the replay to learn more about two simple, but powerful, concepts in Technical Analysis known as Support & Resistance.
Chart of the Day: $SPY has room to run
With the 200-day moving average now below us, prices have room to run to the 20-day. That will be the next significant test.
Today’s line up
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