Great Trades

Great stock trades based on fundamentals and technical analysis.

Monday, July 06, 2009


Market Rebound

As we said over the weekend, "With the very high TRIN reading of over 3.5 at the close on Thursday, the market is likely to rebound some on Monday, at least for part of the day."

As expected, the S&P 500 bounced off the lower Bollinger Band and overcame strongly negative futures to rebound and close at its high, finishing in the green and up over 12 points from the morning low.

Our automated Gap Up Trader went long again at today's close, looking to exit higher in the first hour tomorrow, or up to one hour before the open, so there's a good chance the rebound continues into tomorrow.

However, strength early next week may provide a good selling opportunity, as "there are indications that a market shift is taking place..." A break of the June lows will confirm the Head & Shoulders topping pattern and likely mean more weakness is coming.

The next thing to watch for is either a decisive break of the June lows (the S&P 500 briefly dipped below 888 this morning -- the May 15 879 level is also support) or a breakout from the 927-930 resistance area. Given the VIX signals from last week and some other technical indications of a market shift, there's a good chance the next break will be down after this bounce is over.

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