Yesterday’s price action was very bearish yet again and we are patiently waiting for a counter trend pullback to happen. While there are some good looking plays out there I really do not want to get long until the market clears the air with a bout or three of strong selling. Remember 3:4 stocks follow the market and the odds of picking a commodity or ETF that bucks the trend is unlikely. If you are interested in powerful stocks are ETFs that buck the trend, check out my free trading ideas live here.
S&P500 / Broad Stock Market
We have seen a bug run up in stocks this month and things are looking a little long in the teeth. A large number of stocks are trading above their upper Bollinger band and the broad market is testing that key resistance level also. Typically when a Bollinger band is reached we see price reverse for a couple days at minimum.
While the equities market is in a new uptrend as seen by the moving averages, pullback seems imminent. The last two days has formed reversal candles and are pointing to lower prices.
Dollar Index Hourly Chart
This chart shows a possible bottom forming in the dollar pointing to a three- to eight-day pullback in stocks.