Coolhand's Market Analysis

Last week, I posted this same chart of the NYSE and noted the mixed picture that various technical indicators were painting. I felt that the stock market could go either way. After one week, we see that prices fell for the 3rd straight week on the NYSE, with most of those losses coming on Friday's sell-off.

Looking at the candlestick structure I see an area (between the blue lines) where support is likely to be found. Note that the upper blue line is where price currently sits and it also happens to be the 50 dma, which is a key support level. But that 50 dma has been falling since last summer and price may have hit a double top 3 weeks ago, which is bearish.

My thinking is that the 50 dma fails in the short term in order to pull in more bears (shorts) and in the process raise bearish sentiment levels, which are already rising. This could set up the short covering rally that I believe could take price back up to the April high for another test of resistance. Currently, I don't think sentiment supports a deep decline from here, but I can see the possibility of a head fake over the days ahead.

It will be interesting to see how this plays out.

I have other indicators that I watch and are provided in my daily service, which help in assessing market risk. Liquidity is one of those indicators. My service is not just for TSP participants, but can be used to help those who trade regularly outside of TSP.

Good luck to all!