Markets have defied RSI readings for 3 weeks ?
Currently RSI in S&P 500 is @ 67.36...this is @ 3 week low ???
Most traders like me were extremely cautious when RSI came close to 70...BUT RSI went UP to 76 area......
Investors bull bear ratio is giving a different take on TAPE......currently Bulls are in 38 area & bears are in 32 area.....this is a very bullish reading for market..as it is taken as contrary indicator....
To get to any extreme we need a reading in 60 area..bull or bear......
SO..what this is telling us that most traders have taken defensive or short position in market....means selling has been done or shorts need to close their position to make money on the long side......
SO..how do i intend to deal with my bearish stand ?
I am giving until Option Expiry on 19th April for market to show any weakness...this weakness should end by April 19th...when I will change my strategy to clearing my short position via VXX & QID.......
In the meantime I have 2 long position in SLW & APWR.......
In terms of support..based on RSI it is in 50 area..may dip below 50 but do not see going too much lower based on CURRENT investors bull/bear ratio.....
SO..it is "extremely important" to monitor investors sentiment....
It is also important to accept the verdict of TAPE...which negates any personal takes based on one factor like RSI.....as market is quite capable of proving many technical indicators wrong for days,weeks,& even months.....if 1999/2000 market is any gauge of extremes...so be aware !!!
Based on RSI since 1950....we are around 56 area as of Friday, while highs several times touched 80 & once in 1995 we even touched 84 RSI.....
In 10 year RSI chart last peak was @ 80 May 2007..then we plunged to below 20 in march 2009....in this chart we are also @ 56 RSI as of Friday......
I know..these are lot of stat to look @ ..BUT it is important to look @ short term RSI which is 67.36 & long term RSI which is 56.......
For S&P 500 first support is @ 1150 area...then 1120 then 1100 then 1080 area where there is strong support......
Jobs report will be released on Friday which is a market holiday..expected to show Job growth of 200,000..which will bring joy to the market on following Monday...
@ best this market will remain for daytrading & booking profit as it comes......
I still suggest less exposure & quick trades.......as lot of good news is being priced IN......market KNOWS about upcoming improvement in job picture......market needs to digest lot of good news & RSI need to come to 50 area......as short term goals.....
Good luck with your OWN strategy.
BLOG does NOT give buy or sell.
Saleem
2 comments:
Hi Saleem,
Georgia is awash with red ink. Unemployment in Atlanta is 10.8% expected to climb into 11's. My clients are few and claiming poverty for lower fee rates. Many will be off the unemployment rolls due to congress not voting on another extension. So the unemployment picture will look better than it really is. It's a tough market to predict.
Best Regards
Hi Standards,
100,000 jobs is census workers which is a part time job...
Overall picture is still challenging BUT improving.....
This financial shock did lot of damage worldwide...so a gradual recovery !!!!
Saleem
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