Wednesday, April 20th, 2016

Current Stock Market

Thanksgiving weekend we had the Dubai scare. While most traders were enjoying Turkey leftovers a few handful short sellers found the news amazing and sold off the market in a short 4 hour session. Certain names were hard hit, GS was trashed 4.76 points and RUT was pushed down to 577 levels. Its amazing how short  sellers took the news out of Dubai and played upon the fears of investors in the US.  Monday morning when the full crew was back , none of the follow through came and the news faded quickly. Lets take a look at the current chart of SPY to get an idea whats happening now. Please click to enlarge.

SPY Dec 1

SPY is currently moving in a range since November 16 and is locked in. This is a rectangle formation, a consolidation pattern. SPY is locked in between 109 and 111.50 range. As long as we stay in this range and SPY doesn’t breakdown below 109 levels a thesis can be made that we will continue our uptrend since March lows. This sideways consolidation is healthy for the market after a long uptrend and forms a nice base. Any breaks above 111.50 would be a signal of bullish strengths. How long this will last? Its hard to say and the voodoo of Technical Analysis cannot predict that either.

While SPY is range bound lets take a look at $TRAN chart. Its interesting to see that Dow Jones transports are also locked in a range since July and consolidating.The index is trading above 50, and 200 moving averages. Whats more interesting that some of the stocks in the index are also making the same motions and getting ready as some airlines and rails.

$TRAN

All trends come to an end. Maybe we this consolidation it will start a new trend and maybe to the upside ?  I think most likely, unless we have another Dubai scare and roll back Thanksgiving holidays.

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  1. […] March lows till mid November market needed this  kind of base building to move higher. This is current stock market rectangle chart pattern that follows after a huge move and usually resolves to the upside. The long […]

  2. […] March lows till mid November market needed this  kind of base building to move higher. This is current stock market rectangle chart pattern that follows after a huge move and usually resolves to the upside. The long […]



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