The Bulls Fight Back

The market opened weak in morning trade, rose shortly after and leveled off until the early afternoon when the bulls pushed price into positive territory and closed out the day in the green. Sound familiar? Once again, a floor seems to be under this market.

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So far, the 50 dma is holding. The reversal suggests the market may be ready to move higher again.

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Breadth remains bullish, but has not turned back up yet.

Remember, NAAIM flipped bullish last week, so that's another reason to look for rising prices. I remain bullish.

 

[Jatelle]

Good information - thanks! There are strong market indicators that this rally has got legs (50 day moving average holding, falling VIX index, and a big drop in the Put/Call ratio today). But it has some storm winds ahead. Do you think with the jobs report coming out on Friday - expecting a loss of 21 million jobs - that the bulls can push through it? It is tempting to jump back in but if this is just a dead cat bounce week ahead then I will just wait it out...thoughts?

 

[coolhand]

Hello Jatelle,

I am not expecting a dead cat bounce. There is a battle over control of this market and the bulls are winning. I point to the smart money (NAAIM) as reasonable evidence that price will be going higher. NAAIM is now leaning bullish. By following smart money I believe investors increase their chances of being on the right side of the market.

 

[Jatelle]

Thanks Coolhand. This is what I thought - very helpful. It will be good to see the next NAAIM report on Thursday. There is so much fear-mongering out there it's easy to get spooked. I figure the market has already baked in the expected losses due to the coronavirus. Keep up your good work - it's really appreciated!