SPX index has been trading in a wide range from 1040 to 1130 in the past couple of months. Currently, it is testing the high bound again. What's next then, make or break? It is not easy to determine the direction until the market tells you so. The market sentiment definitely has changed from bearish to bullish, the pattern of the SPX also has shifted to a more bullish side than a month ago. Based on my observation, the market is likely to register non-moderate gains in six months. However, the chance of break above from current level is unknown, it is at a very critical pivot point.
Even though, the direction is unknown, a carefully planned strategy can minimize risk and maximize return potentials. Since September, SPX has rallied 5.7%, the chance of a correction is getting increasingly higher, given the historical poor performance of Sep and Oct. Moreover, rates market reaction today may implicate a top for the equity. That being said, I would hold the short position and get out at lower levels. And I would cover all my shorts if SPX close above 1150. I would also buy at 1040 if SPX drop to that level again and cover the long if it close below 1035. From there, I would look for opportunities to buy SPX at levels between 950 and 1000.
3 comments:
any comments on the light volume these weeks?
bit of a quandary, isn't it!
best, mrkt rwnd
Liz,
Low volume is typical in summer time. When the PM come back from vacation, you will see the volume pick up dramaticly.
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