I'll be honest with you, I did not think the 50 day moving average (dma) was going to hold again after yesterdays close but then again the market doesn't really give a rats ass what I think or feel. Good lesson on why you should not follow your gut feeling especially when it may turnout to be a gastral anomaly. Once again the 50 dma which is a widely used average by many market participants acted as a spring board for a bounce higher. So regardless of my gastral issues I would have not shorted even after yesterdays poor close and increase in volume because of its proximity to this average. If however, it broke the 50 dma and subsequently tested it be resistance then a short position might have been viewed as the higher probability trade. So patience would have been in order here. But of course I saw this massive rally today...didn't everyone? Just kidding. What I did see was a similar set up that I posted about last week. The 5 min chart of the SPY below reveals the same activity as we spoke about previously around the 50dma. The only real difference was that there was no dip back into the area of support but then again this happened only 10 minutes after the opening bell and the volume, like it always is after the bell, was very high. The transfer from weak to strong hands happened fairly quickly and the market never looked back.
On the daily chart below we went from a bearish scenario yesterday where price closed near the low of the day on increased volume to now a bullish engulfing pattern today with price closing on the highs, on slightly lower volume. So where do we go from here. Probably back to resistance and if you read any of my poorly written posts would know that sits at $165. When is it going to happen? Beats me and it might not even make it there! If it does you should be prepared to make a decision and maybe take a peak at what volume is doing if price does get there for additional clues, Most important of all is remember to take your GasX if it does and listen to the charts and not your bloated stomach.
Thanks for reading.