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
- 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.
- 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.