The bears were pounding their chest this morning as futures indicated the market would continue its move down the world was over after the European elections. The bears were ready to eat some bulls, but once again the bulls showed that until the bears can managed to break support they will always get rocked. For a while, the only thing that would make me bearish would be a break of 135.97. This was written Friday on 5/4 :”For a new trend, the bears will have to break 135.97 and the bulls have to break 141.82″ . Again this level held as buying pressure quickly came in as SPY neared the low of the day at 136.46.
All the price movement over the last two months has lead to a big fat zero in a market trend. Had you just left and came back you would still be in the same place. Of course watching the whipsaw on a daily basis makes one cringe. While the bears may be pounding their chest because the market is down from its highs, they have made no damage since the last “dip”. The bulls still remain in control of this market. In reality this whipsaw makes trading easy, you have two areas where a trend change will happen above 140.45 (Note this is lower then the 141.82) and 135.97. If you are short your stop is 140.45 if you are long your stop is 135.97.
XLF is another sector that bounced off support today too XLF managed to bounce off multiple levels of support. First was a round number of 15.00, followed by support from its lows in March and April and lastly by its 70 day ema at 15.00. This all lead to a nice bounce in financials pushing it right up to its 50 day ema.