S&P Tug of War Continues as Market Seeks Clarity
Updated
Last week marked some of the most unclear price action we've seen. Starting on Tuesday, sellers gradually took control from buyers, but most of the action occurred during extended hours (meaning on VERY low volume). On Friday, sellers finally acted during regular trading hours and attacked the market right from the open. However, it seems buyers were only waiting for this, as the price suddenly pivoted, and the day ended with a spectacular bull run.
At this moment, the market is sending very confusing signals, and the best strategy for a swing trader is to simply stay away for some time. Here's a formal summary of the current situation:
1. Long-term Bullish. The price is in an uptrend on both weekly and monthly timeframes. May closed above April’s high
2. Short-term Bearish. Weekly consolidation is in progress, and despite the bull show-off on Friday, the market is still consolidating on the weekly timeframe. Moreover, the week closed with a bearish "hanging man" candle.
3. Respect Friday’s Bull Run. It was unusually strong for bearish context and could easily develop into something significant.
To develop a convincing thesis, we need to see some clarity on the daily chart. Either bears will confirm a daily lower high, signaling the continuation of the weekly consolidation, or bulls will set a daily higher low, signaling the continuation of the uptrend. Until this happens, we can expect more unexpected moves in both directions without much follow-through.
Disclaimer
I don't give trading or investing advice, just sharing my thoughts.
At this moment, the market is sending very confusing signals, and the best strategy for a swing trader is to simply stay away for some time. Here's a formal summary of the current situation:
1. Long-term Bullish. The price is in an uptrend on both weekly and monthly timeframes. May closed above April’s high
2. Short-term Bearish. Weekly consolidation is in progress, and despite the bull show-off on Friday, the market is still consolidating on the weekly timeframe. Moreover, the week closed with a bearish "hanging man" candle.
3. Respect Friday’s Bull Run. It was unusually strong for bearish context and could easily develop into something significant.
To develop a convincing thesis, we need to see some clarity on the daily chart. Either bears will confirm a daily lower high, signaling the continuation of the weekly consolidation, or bulls will set a daily higher low, signaling the continuation of the uptrend. Until this happens, we can expect more unexpected moves in both directions without much follow-through.
Disclaimer
I don't give trading or investing advice, just sharing my thoughts.
Note
Bearish hammer on daily but market closed above prev day.Note
Day closed as an inside bar. Price is an uptrend on the hourly but bulls failed to set new high yesterday. So it can play out both ways. Note
Bulls have confirmed control by setting both weekly higher low and new high. If they manage to hold it tomorrow, it will be a homerunNote
On a side note, there is a peculiar divergence between SPY price action and market internals. The yellow line at the bottom shows the difference in the number of stocks hitting new monthly highs and lows. I have not tested this indicator sufficiently to draw conclusions, but it is something worth mentioningNote
Just a normal "resting" day. No big sellers, neither buyersNote
Lots of volatility today but little progression. What is really important is that the week closed above May's high. The price has found acceptance at this level, so we'll likely see a continuation of the uptrend.Note
Week closed strong. Buyers held the gap from Wednesday, Sellers failed to fill it. I also like Friday's daily inside bar, closing at the high of the day.
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