SPX SMA100 and your vacation is over. | Bulls on Wall Street

SPX SMA100 and your vacation is over.

Welcome back from the holidays.. you’re not the only one ready to trade – the institutions and pros will likely step back in this week and bring some volume back to the trading floors.

 

This should be an interesting week and no one honestly knows where we’re going. Some think that we’ll blast off and take out the 52 week highs on the SPX, while others are convinced that it’s profit taking time. I see the technical argument for both, but we have to remember that the pros are back and they’ll want to keep the market predictable. Right now, it has been.. buy heavy when SPX pulls back to 1040 and sell at 1130…. Or is it SMA100? It’s hard to say which level the pros are watching, so we have to be careful tomorrow. 

 

There are two scenarios I’ll have my eye on from an SPX centric point of view

  1. Will we gap up above SMA100 in the morning? If so, that’s a crazy land to be in.. you’re still below SMA200, but above previous resistance. It’s actually a place I don’t like to be. If we get the gap, I anticipate a fade from there back to SMA100. If it holds, the pros will likely load up and play some positions to SMA200, then 1130ish for a few days of chop chop. If SMA100 fails, I’m going heavy short. My guess is that it could quickly fall back to the SMA20 position on any market weakness over the next few days.
  2. We open flat or below SMA100. This is actually a more comfortable trading scenario for me. I would much rather watch where the pros take it and then possibly take a trade later in the morning or in the afternoon.

 

For both, I will likely NOT trade the first 30 minutes. I think it’s a setup for failure unless you get lucky and pick the right side of the trade. Keep in mind that the SPX is not overbought.. yes, it’s approaching the top of the range, but not overbought. It can still have legs. Second point – don’t forget that the pros want your money and predictable places to take it. It doesn’t benefit them for the market to get out of the trading range we’re currently in. Third point to leave you with – as usual, jobs numbers come out on Thursday. Do you really think pros are going to be heavy long going into that report at the top of a trading range? Stay nimble and don’t marry too many stocks.. even one night stands can hurt.

 
See you in the morning.  Lots of good long setups.. That’s dangerous 🙂
 

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