S&P 500
The S&P 500 fell rather significantly during the day on Wednesday, but bounced enough off of the 1810 level to form a massive hammer. Because of this, we have to wonder whether or not we are going to see some type of attempt to turn the market back around. I won’t be buying it though, because it is far too bearish at this point in time in there is far too much in the way of resistance above for me to feel comfortable going long. In fact, I would have to see this market get above the 1950 level in order to feel comfortable at this point.
I would be willing to take longer-term trades if we get the right candle sticks, but right now we don’t have them. It looks as if it’s very likely that a resistive candle above could be a selling opportunity though, and as a result I think that’s probably the most likely move.
NASDAQ 100
The NASDAQ 100 did the exact same thing during the day on Wednesday, as we bounced off of the vital 4000 level. Because of this, we ended up forming a nice-looking hammer, but I still see a lot of noise all the way to at least the 4360 handle. If we can get above there, I am much more comfortable buying at that point in time. Again, in this market I feel that it’s likely to see selling pressure after rallies going forward, and as a result I would like selling this market on exhaustive candle. I would also be a seller below the bottom of the hammer as it would show the market picking up more bearish pressure in dropping below the vital 4000 round number.
Ultimately, there are a lot of moving pieces out there, but right now it seems like the markets are absolutely shaken to the core, meaning that the downside is still very much a real threat as far as direction is concerned.
