Thursday, April 2, 2015

$SPX and the "Danger Zone"

In yesterday's $10 Trigger Alert issue, I included a chart of the S&P 500 and what I call the "Danger Zone."

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(Updated chart)

The index hit a high in December of last year, and tried to push above it twice since - in February and March. Each time, it has pulled back but found support at the 100-day moving average and uptrend.

It’s likely we’ll see the S&P 500 test that overhead resistance again. We’ll have to watch it closely when it’s in that “danger zone” between the December and February highs. When the S&P 500 pushes into the Danger Zone, the longs take profits and short sellers pile on and drive it lower.

We need the S&P 500 to push up through the danger zone before stocks can really take off. If the S&P 500 can break out over those old highs, it should be led higher by small caps. 

If the S&P 500 rolls over and breaks through support, then we’ll have to look for stocks that aren’t moving with it. After all, there’s always a bull market somewhere. I have ideas on that, which $10 Trigger Alert subscribers are aware of (as of Wednesday).

Of course, fans of TV's Archer know what can happen in the Danger Zone ...

This Friday is Good Friday, and Passover starts on Friday night. Volume is already  light. And when volume is light, weird things can happen in the market. So be wary of that.

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