S&P 500
The S&P 500 had a very volatile session during the day on Monday, as we continue to worry about situations in China. The market went as low as 1900 before bouncing significantly in forming a relatively neutral candle. Having said that, I still believe that there is plenty of bearish pressure, and the fact that the market is getting ready to bounce (more than likely), isn’t enough to get me buying at this point in time. Quite frankly, I believe that the easiest trade is to simply wait for this market to rally and show signs of exhaustion in order to start selling again. I would welcome that move. On the other hand, if we can break below the 1900 level, we could very well continue to go much lower right away. Either way, I have no interest whatsoever in buying this market.
NASDAQ 100
The NASDAQ 100 had a very back and forth type the session as well, although it did form something closer to a hammer than a neutral candle. This is one of the reasons I believe that the stock markets will probably rally for the short-term today, as the markets are a bit oversold. However, I think that the prudent trader will simply wait for the exhaustive candle that I had mentioned previously. I see the 4450 level as the beginning of massive resistance that will be very difficult to get above at this point in time. Having said that, I do not think that the markets are able even to reach that area. If we break down below the 4200 level, that of course would be very bearish as well and it should be an acceleration of the downtrend that we’ve seen since the beginning of the year.
All things being equal, I do not believe that you can buy stocks at this point in time, let alone indices. Given enough time, we will get a rally but right now we are nowhere near it.
