3 BIG Up Days in the (Bear) Market
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Hi, folks! Welcome to today’s Rude Awakening…
Today is an INTERESTING day in the marketplace…
And yet, it’s exactly what we could have expected.
Don’t Call It a Bull Market
We have now seen three up days in a row…
But that does not mean the overall market isn’t still trending bearish.
We are sitting right now at the 50day MA we keep coming back to — it’s a crucial level of support and it’s a level of resistance. For a refresher on the differences between the two, click here to review Friday’s issue.
The 50day MA is a line in the sand for this marketplace. It will be interesting to see today whether the S&P will be able to push through this resistance level to the upside.
It is most definitely trying!
So, today’s question is…
Why Does It Matter if the Market Pushes Above the 50day MA?
There are a few things we need to look at to answer that question.
Let’s start by looking at a chart of the last few trading days.
First, the gap down reversal. This means the market opened quite a bit lower than the previous day, but we were able to reverse that move throughout the trading day.
The very next day, we gapped up.
And then the next day, we had another microgap.
And yesterday was the third consecutive gap up in the marketplace.
What does this tell us?
Well, if you analyze the market’s chart over the last year…
The last time we had three gap ups in a row was back in April — and it led to a renewed, long term surge in the market.
But, before we get too excited…
Pulling Back From All the Noise
Instead of looking at a daily chart, if we look at a monthly chart, like we did yesterday, you’ll see that the last month of this market shows a bearish engulfing candle.
This means the candle for this month engulfs the previous month’s on both sides. In other words, massive swings and volatility. And that is a bearish indicator.
The thing is, we can’t know what that means for the longer term market until we get more data from more trading sessions.
So, this data and analysis is no crystal ball for the next few months, or even weeks.
But, it does tell us how to trade each new day!
And today, we’ve set up an earnings-day trade idea on Micron Technology, Inc. (MU).
This will be a very short-term trade, allowing us to capitalize on all the implied volatility based on their earnings announcement happening tonight. And the best part is, we’re using options to profit off a wide range of movements the stock might see after earnings are announced.
So, to see today’s 84% probability trade on MU, click here to sign up for the free beta test of the Rude Awakening Pro.
It’s getting close, folks, but there’s still time to be one of the LAST people to sign up for free lifetime access to this premium service…
That’s it for today.
We’ll talk again tomorrow…
Editor, Rude Awakening