Hey Market Pilot,
Last week I wrote about how the S&P 500 (SPY) finally got under its hourly 50 simple moving average (SMA) with the hourly Moxie Indicator™ below zero. This is the negative setup that I was expecting for the markets to move lower, but I didn’t expect it to happen on the day after Thanksgiving. Usually, that Friday is a lazy day in the markets as most traders are busy digesting the previous night’s meal and taking it easy since it is also a shortened market day. But not this time.
While the technicals were set up for the market to move lower into the pullback I have been looking for, it was news of a new Covid-19 strain in Africa which was the catalyst for the stiff move downward. So much for a sleepy holiday half day. The markets sold off all day and were getting fairly extreme by the end of the day.
Now (on Monday) the markets have bounced. This could possibly be viewed as a good sign since the markets didn’t open with a gap down from that Covid-19 news being digested over the weekend. But even though the markets have bounced, they are not out of the woods as price is still below key moving averages on the hourly and 15-minute charts.
My indicators are still reading negative and a sustained move to the upside is not confirmed. Breadth got even more negative from the Friday action, so we could be getting close to a washout, but the market hasn’t righted itself yet.
It’s during times like this that we look around the market for leaders and see which names don’t care if the market is dropping because those will continue to lead the way when the market finishes its pullback. Be patient right now since the market is still working itself out and we don’t have all the information about the new strain and how market participants will handle it.
Your Profit Pilot, TG