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The Market Will Bounce
www.oneoption.com
Some traders are positioned for a big move lower. That is a mistake.
PRE-OPEN MARKET COMMENTS WEDNESDAY – This is a time for evaluation. I have been stressing this for the last 10 days. The market was going to probe for support. I was fairly certain of that based on the red engulfing candle the day before the jobs report. The depth and duration of the dip was going to tell us where we go next. Your focus should be on day trading while we wait. Stay flexible and don’t get locked into one side or the other.
I believe that the dip will end this week and the market will bounce. I was willing to let the SPY move down to $500 in this scenario. That would be a brief and shallow dip and it would make me bullish. As that timeline draws near, I am watching to see if it plays out. If it does, I am ready to buy and add.
If I don’t get that confirmation of support and a nice bullish trend day, I will continue to wait. That would be a sign that the dip will be deeper and that the selling pressure is heavier than expected. That would tell me that the bounce might not get back to the all-time high and that a short might be setting up.
It is too early to determine which scenario is going to play out. However, some traders have already decided that this is a market top. THAT WOULD BE A HUGE MISTAKE!!!
When (not if) the market bounces, they will be forced to cover. That will fuel the move higher. I plan to be in cash and when I see that, I will not be focused on closing losing trades, I will be buying and adding.
The market was not able to get off the deck yesterday. That is a sign of selling pressure. For that reason I would not trust this gap up. Let’s go through a bid check and see how much of this gap holds. If it all holds, we can trade from the long side. If most of it is given back, we have to use caution and trade both sides.
Content is provided by OneOption, LLC, which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the OneOption content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.