It was a ‘Federal Reserve’ day yesterday with chairman Bernanke announcing that there will be no taper regarding the QE program until the end of the year. Stocks and Gold in full throttle spiked upwards in a buoyant climate. Bulls taking the markets control and cornering bears who were either unprotected or to stubborn to cover their positions. The rest are known. S&P made a new all time high by reaching 1729 and closing for the day at 1625. Gold reversed from 1300$ to 1370$ breaking all short-term resistance levels. lost the battle yesterday with Bernanke surprising everyone with the announcement and traders running to cover their short positions. I believe that the sharpness of the rise was mostly because many people (including me) were expecting a double top and a rejection near the highs. Fortunately for us at TRADING2DAY although we anticipated the index reaching 1680-90, we did not expect the latest upward burst towards 1704. At the pull back towards 1695 we changed to neutral once again, as the market signaled a potential final rise towards 1730-40 as analysed in our last post. The following chart is the same from our last post only with updated prices.
No we did not profit from this upward move, but we did not lose either. We are confident that this blow off is temporary and prices will retrace at least 38% of the rise and that is the main reason why we do not want to take part in this bullish ‘feast’. We still believe that the rise will be met with selling as soon as prices complete their topping process around 1740-50. Breaking below 1717 and 1700 will imply the top is in according to our analysis. Selling on signs of weakness is advised but not just yet. Bears have not completed their short covering and I see it is very possible to trade at higher price levels than 1730.
Short term trend remains up and inside the upward sloping channel hitting its upper boundaries. The 38% Fibonacci retracement is our typical first target for a pull back as we believe that the rise from 1627 is nearly if not already over. For more detailed analysis and comments through our exclusive twitter account for subscribers, become a member today.
A term used to describe a trader (bear) who is expects that a particular asset – be it a commodity, currency or product – to fall in value. The opposite of a ‘bull’.
The idea is that bears attack by getting up on their hind legs and striking their opponents down with their paws, symbolising the fact that they are sellers driving prices down.
Beliefs held by the aforementioned ‘bears’ of the trading world, are described as bearish. Characterised by a generally pessimistic outlook on the state of a given asset, a bearish outlook would suggest that a fall in value is imminent. Opposite of bullish.