The potential bear trap and bounce noted in yesterday’s update is following through today and now it is time to set its parameters.
To keep things simple, let’s use a daily chart of the S&P 500 as a general guide on the broad US markets. The bear trap was the in-day drop below the January low (downside support parameter) to 1980.90 and reversal yesterday. Now the bounce will deal with upside resistance parameters.
They come in the form of 1, 2 & 3 as we often note.
- The SMA 50, currently at 2044
- The red dotted trend line intersecting 2050
- Key resistance at 2064.62
On the near-term picture, the market remains bearish until it proves otherwise, not the other way around. If SPX breaks all of the parameters noted above, the story changes. But as of now the market is just bouncing to screw up as many bears as bulls.