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Thursday, November 12, 2009 10:03:04 AM
Briefing.com Swing Trader: S&P Notches a Fresh New High, But Expect Upward Momentum To Wane
After Tuesday's day of rest/consolidaiton after a 6-session rally off the early November low, the market resumed its strength on Wednesday taking the S&P up through the October peak of 1101. A high of 1105.37 was notched during the first 30-minutes of trade, before prices succumbed to selling pressure. The major indices finished positive on the day, but still leave a near-term "overbought" state in effect.
On the SPX chart below, the highlighted yellow areas represent the similarities of the first 2-weeks action in November, October and September. I personally cannot recall a time were the patterns are almost identical in depth and duration, but more impressively identical in the same time periods surrounding month-end and the first 2 weeks of the month. If the past is any indication of the future, I would guess that the market is due for some sort of sideways chop here along the highs into next week's Expiration (Nov 20).
Market internals/sentiment readings are mostly in the "neutral" zone, so that too confirms the potential for a chop the next few days. Take particular caution on being aggressive Short up here, especially into weakness. The series of 7 "higher lows" will likely have the crowd turning bearish on the next "lower low" which could set-up a short-squeeze. Probably best to Short into strength at this point.
The chart below shows the Relative Underperformance of the Banking sector (BKX) during the last few weeks. The group has lagged the broader market considerably and should set-up Shorting opportunities as prices run into resistance zones. Keep watch on stocks like BAC, COF, CMA, JPM, NTRS, PNC, GS, STT, and WFC as possible Shorts, along with Financial ETFs, IYG, XLF, FAS.
Any further questions, comments or suggestions can be emailed to Scott Smith, ssmith@briefing.com
After Tuesday's day of rest/consolidaiton after a 6-session rally off the early November low, the market resumed its strength on Wednesday taking the S&P up through the October peak of 1101. A high of 1105.37 was notched during the first 30-minutes of trade, before prices succumbed to selling pressure. The major indices finished positive on the day, but still leave a near-term "overbought" state in effect.
On the SPX chart below, the highlighted yellow areas represent the similarities of the first 2-weeks action in November, October and September. I personally cannot recall a time were the patterns are almost identical in depth and duration, but more impressively identical in the same time periods surrounding month-end and the first 2 weeks of the month. If the past is any indication of the future, I would guess that the market is due for some sort of sideways chop here along the highs into next week's Expiration (Nov 20).
Market internals/sentiment readings are mostly in the "neutral" zone, so that too confirms the potential for a chop the next few days. Take particular caution on being aggressive Short up here, especially into weakness. The series of 7 "higher lows" will likely have the crowd turning bearish on the next "lower low" which could set-up a short-squeeze. Probably best to Short into strength at this point.
The chart below shows the Relative Underperformance of the Banking sector (BKX) during the last few weeks. The group has lagged the broader market considerably and should set-up Shorting opportunities as prices run into resistance zones. Keep watch on stocks like BAC, COF, CMA, JPM, NTRS, PNC, GS, STT, and WFC as possible Shorts, along with Financial ETFs, IYG, XLF, FAS.
Any further questions, comments or suggestions can be emailed to Scott Smith, ssmith@briefing.com
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