{"id":250,"date":"2006-06-08T19:11:38","date_gmt":"2006-06-09T00:11:38","guid":{"rendered":"http:\/\/www.selfinvestors.com\/tradingstocks\/?p=250"},"modified":"2018-08-12T01:16:49","modified_gmt":"2018-08-12T06:16:49","slug":"saved-by-the-bull-convincing-reversal","status":"publish","type":"post","link":"https:\/\/selfinvestors.com\/tradingstocks\/state-of-the-stock-market\/saved-by-the-bull-convincing-reversal\/","title":{"rendered":"Saved By the Bull – Convincing Reversal"},"content":{"rendered":"

When the market is searching for a bottom and you see it drop like a stone with heavy volume, you have to be on the lookout for that dramatic reversal that signals a bottom.\u00c2\u00a0 We got it today.\u00c2\u00a0 In a report a couple days ago<\/strong> I mentioned that the reversal had me unconvinced because it was lacking volume.\u00c2\u00a0 That was certainly not the case today.\u00c2\u00a0 In fact today marked the 4th highest trading volume day in its history (the biggest volume day was on April 18th 2001 when the Nasdaq traded 3.08 billion shares – surprisingly the only time it has traded more than 3 billion shares).\u00c2\u00a0 While the Nasdaq didn’t close in the positive (the only negative of today’s action), it did reclaim a very important support level at its trend line off of the October 2005 lows.\u00c2\u00a0 Have a look.<\/p>\n

While the S&P finally broke down below the 200 DMA, it still had support of its trend line which it bounced off of in convincing fashion today.\u00c2\u00a0 I didn’t go back and research volume levels for the S&P tonight, but no question it was up near a record as well.\u00c2\u00a0 One negative is the fact that it did not reclaim support of the 200 day moving average.\u00c2\u00a0 It would not at all surpise me to see the S&P retest that trend line at some point in the coming weeks.\u00c2\u00a0 You’d like to see that happen with declining sell volume.<\/p>\n

The Dow broke through its 200 day moving average today too, but it was able to reclaim that support level.\u00c2\u00a0 Volume wasn’t quite as good in the Dow, but impressive action nonetheless.\u00c2\u00a0 It still has support of its trend line off the October ’05 lows around 10,500.\u00c2\u00a0 There certainly is a good possibility of testing that level before the summer is over.<\/p>\n

So where to go from here?\u00c2\u00a0 I personally took profits in short positions today and dabbled in a couple long plays in my personal accounts when it was clear the reversal was taking shape.\u00c2\u00a0 This volatility has certainly created many opportunities for those getting in and out in a few days time, but those kinds of opportunities are better geared towards the trader who’s able to track the markets all day.\u00c2\u00a0 For most investors (who aren’t able to keep close tabs on the market during the day), the best option is to remain largely in cash while the market gyrates back and forth finding a bottom.\u00c2\u00a0 You’ll save yourself the stress and probably quite a bit of money by continuing to be patient.\u00c2\u00a0 From here, we most likely see a continuation of the springboard action we saw today for a day or two, but it should come back and possibly retest the lows.\u00c2\u00a0 At this point, a big long signal would occur on some kind of confirmation day (a 2% move up with heavy volume).<\/p>\n","protected":false},"excerpt":{"rendered":"

When the market is searching for a bottom and you see it drop like a stone with heavy volume, you have to be on the lookout for that dramatic reversal that signals a bottom.\u00c2\u00a0 We got it today.\u00c2\u00a0 In a report a couple days ago I mentioned that the reversal had me unconvinced because it … Continue reading Saved By the Bull – Convincing Reversal<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-250","post","type-post","status-publish","format-standard","hentry","category-state-of-the-stock-market"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/posts\/250","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/comments?post=250"}],"version-history":[{"count":0,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/posts\/250\/revisions"}],"wp:attachment":[{"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/media?parent=250"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/categories?post=250"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/tags?post=250"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}