We hit record highs again in the Dow last week. But we had a small correction and things may still fall a bit in these 2 days. We will have to look at the 60 min charts to tell us what is happening. On the daily charts, we are still in an uptrend. Therefore, we will still remain bullish until the charts tell us otherwise.
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The stock market is going to open higher thanks to stronger than expected jobs report. A few days ago, I pointed out I was looking for a break above the downtrendline. So today, the jobs report help us to go above it. This is good and bullish and I hope it will stay above the downtrendline and not move down anymore.
The S&P 500 is still in correction mode and this may not be a good time to initiate long positions. I expect the support area to hold. If the support area in the 60 min chart does not hold then we can expect more lows for the SPY.
Markets are still drifting lower in correction mode. The SPY has drop below its 60 min 20 MA and 50 MA. Not something that I would like to see but I'm not panicking yet because of support below.
The thing about stock markets is not to see a big bull non stop run in the indexes. For a healthy uptrend, there should be corrections now and then. If not when the market eventually drops there will be no support underneath. Sideways movement like the on from December to February is a correction but a sideways correction. If the Dow drops below the short term support, the next area of strong support to look at will be 20,000.
The chart above shows the daily chart of the S&P 500 index. As you can see, the S&P 500 is above its 20 MA, 50 MA and 200 MA. This is a picture of bullishness and it will be wise for us to remain bullish until the charts tell us so. There is heavy support around the area of 2250 to 2300, so any correction will mean a better opportunity for us to buy stocks at a cheaper price.
Let us now switch to the 60 min chart of SPY pictured above. We had a gap up a few days ago but the SPY quickly had a correction. This is normal and healthy because the stock market cannot be expected to move up in a straight line. It needs to take a breather. There is ample support around $237 and it is very highly probable it will hold. We do not want to see the SPY close below its 60 min 50 MA and close below support.
QQQ looks almost the same as SPY with the exception that price is closer to the support area. Just like SPY, we do not want to see QQQ fall below support area and its 60 min 50 MA. Until then we deemed that the indexes are moving sideways setting up another leg up.
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