Get Ready for a Tradable Bounce
Posted on: Sep 8th, 2009 | By David Grandey | Filed under Stock Market Investing
It’s no secret the market this past week has been having a hard time going anywhere — but we expected that. That being said, there is a lot of order to this week’s action and the action off the most recent peaks.
Should the markets follow the script I’m about to lay out below, we test the Blue support levels. Then, we can look for a bounce. This could be considered a tradable bounce, followed by a final move to those June breakout levels in the DOW near 8900 — 950 for the S&P 500.
For now, we’ll take it one step at a time..
This first chart tells you why Friday’s run stopped where it did:
Why? Because those are multiple resistance levels as shown above in the Red Line and the pink downtrend channel as well. Sure, it skirted the line, but we aren’t reading into it too much due to low volume pre-holiday trade. Now you know why we call charting an art and not a science. Also, you can also see in the chart above that the full stohcastics are in nosebleed territory once again.
In addition to those support and resistance levels, Elliot Wave fans can see a few short-term scenarios above, namely the BLUE Waves 1,2,3, and 4.
If true, then here comes wave 5 down to the 9100 Dow level and 975 level on the S&P 500. You can also see the RED Waves 1 and 2 — if this is true, wave 3 to the blue line levels stated above could be in play as well.
This week, we’ll find out soon enough it they want to take the Dow and S&P 500 back up to retest the highs in a “Just Because We Can” move…
All the ingredients are on the table should the markets want to pullback from here. What we’ve seen thus far is a market having a hard time following through. That is, most individual stocks out there have been pulling back in a corrective fashion vs. a fast and furious move to the downside.
Should the markets follow the script laid out above, we test the Blue support levels and then look for a bounce that would be the start of the right shoulder by the way when viewing the daily charts. This could be considered a tradable bounce then a final move to those June breakout levels in the DOW at 8900ish and 950ish in the S&P 500. So we’ll take it one step at a time..
Sincerely,
David Grandey
Source: Get Ready for a Tradable Bounce
David Grandey is the founder of All About Trends, an email newsletter service revealing stocks in ideal set-ups offering potential significant short-term gains. A successful canslim-based stock market investor for the past 10 years, he has worked for Meriwest Credit Union Silicon Valley Bank, helping to establish brand awareness and credibility through feature editorial coverage in leading national and local news media. 