| Two Reasons to Stay on the Sidelines For the S&P 500, support levels are at: 3,860, 3720, 3,640, and 3,550. If stocks take out this first line (3,860) on a closing basis, it opens a “trapdoor” to a nasty drop to the low 3,700s. This is a BIG reason not to be adding to longs this week. Similarly, if you are a stock market bear, you don’t want to ignore the strong uptrend stocks have established over the past four months. We’ve had two “bear traps” during that time, in which stocks broke down violating their trendlines, only to reverse and rally hard. I’ve identified those occasions with red circles in the chart below. If you’re a bear, these are why you don’t want to bet on a big collapse right now: stocks could break down only to reverse and take you to the cleaners. So again, the best strategy this week is to “watch and wait.” Let the market show you what is coming, and then take action. Best Regards,  Graham Summers Editor, Money & Crisis |
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