US Stock Market; Bounce Upcoming?

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The US stock market is negative pre-open, but don’t be surprised if we get a strong bounce soon. It could be a trade-able bounce. I have bought a couple items in anticipation and am watching several more.

A bounce is a bounce; a trade. It is what happens on a would-be bounce that will be important going forward. What will the market do at resistance? That will tell us a lot about what this thus far mini correction will be, another quickie or something more lasting.

SPX has firm support at around 1800.


One of the leaders, NDX needs to bottom shortly and make a ‘higher low’ to February or it is going to activate a bearish intermediate signal.


RUT is another leader and it has the same status.


Finally, the SOX is at an interesting juncture. It broke down from a little bearish looking pattern and is testing the Crimea hype drop zone. The real important support is the 10 year breakout line. Expect a bounce there.


If SOX remains above the breakout line, improbably enough the market melt-up scenario remains in play. Is it too hard to imagine a scenario where the jitters inserted into the market provide fuel for such an event?

Smart/Dumb sentiment courtesy of Sentimentrader

Still, we will favor a bounce and then a continued corrective environment due to other factors that we went over this weekend in NFTRH. But for the short term, the smart money seems to think a bounce is likely as well. A check on the AAII shows a primary dumb money group that is declining toward firmly bearish.

AAII sentiment, courtesy of Sentimentrader

The alternative of course, is a loss of the supports shown above and a continued decline. That would put an (!) on the bearish events of the last week and indicate a more structural breakdown.

It’s a traders’ market and cash is a position folks.