I noticed a huge drop off in "high quality" new LONG setups in my scans this weekend. The action that we saw in friday's market action is sort of a small RED FLAG as far as i am concerned but i think its a little bit too soon to read into this. As they say, "one sunny day does not make a summer", so one bad selloff does not mean its a "bear". It doesn't matter UNTIL it does. What i mean by that is, if we start to see multiple selloff days, aka, DISTRIBUTION DAYS, then and only then will it be a WARNING SIGN that we are getting closer to an important topping out situation.
As a short term trader, my main focus is TECHNICAL ANALYSIS and i try and be as UNBIASED as i possibly can when it comes to market direction. I frequently change my bias as quickly as possible once i see that i am on the wrong side of the market or if my market views as not matching up with the market's action.
This week was a very 'strange and surprisng' week for the stock market and the FED's action was quite surprising in my humble views. I truly believe that if the FED believed that the economy was "truly" improving than this week, would have been a golden opportunity for them to begin the 'tapering' process and start to slightly reduce their hugely 'controversial' asset purchases program that srated in 2009, QE(Quantitative Easing).
The fact that Ben Bernanke, decided to not taper when a big majortity of the investment community was expecting it is very telling and quite surprising to be honest.
Maybe the FED thinks the economy is not ready for this?? But if that's the case, does that mean that over 3.5 year of QE is NOT really helping?? How many years of QE do we have left?? So many questions to ask, but the answers seem very vague right now. Only time will tell i guess.
As far as the Market Charts goes, i am seeing POTENTIALLY, important developments in the SPX/Spy Charts. Again, i repeat the word, "POTENTIALLY", but please look at the attached SPX/SPY charts closely and read the notes on the charts. There's a potential reason to be slightly concerned right now.
The next few weeks(months) should be very interesting. Brace yourselves for some potential big volatiltity at minimum.
happy trading to you all !