Put two traders in a room, and one might scream to sell while the other puts in orders to buy. So who’s right? Well, they both could be—depending on the indicators they’re looking at and the kind of trading you want to do.
We’ve rounded up our InvestorPlace advisors to give you their read of the market.
John Jagerson and Wade Hansen, Slingshot Trader
Although Bernanke’s comments to the House and Senate have kept the market’s rapt attention this week, earnings season also continues to take center-stage as investors try to create growth expectations. So far the results have been promising, but the major money-center banks have had mixed results once you remove accounting adjustments, which has contributed to a more neutral outlook.
Small-Caps Showing a Top
Jon Markman, Trader’s Advantage and CounterPoint Options
While there has been a lot of deserved applause for the recent success of the small-caps, I need to point out that Thursday the Russell spiked to a level that looked suspiciously like a blow-off top.
Three of the past four times the Russell 2000 ETF (IWM) has touched the top of the envelope it has subsequently then traded down for the next one to five months. The only exception was when it hit that level in the first week of this year, and then proceeded to trade higher for five months. Considering that the third week of July has served as a summer peak for stocks several times in the past two decades, I think we have to give this signal some attention.
Indices Still Bullish
Ken Trester, Maximum Options
Our index indicators continue to give bullish readings, unchanged from last week, as the indexes continue to push higher. The bullish readings will remain in place as long as the Dow stays above 15,110, the S&P 500 above 1630, and the Nasdaq above 3450. Those numbers represent the index’s 50-day moving averages, and they can be used as stop prices for traders wishing to trade the market’s current upside momentum.
1700 in Sight
John Lansing,Parabolic Options, Trending123 and Power Trading at the Open
Since we haven’t seen any kind of pullback in the S&P 500, and in fact have seen yet another all-time high, I’m anticipating a move at least to the 1700 level. That represents the width of the channel the index has been trading in. Now, it could be even greater if we see a bull flag or backtest.
But as things stand right now, I don’t recommend buying at this level, because you’ll just be buying near the top. However, if we see an unexpected pullback you could get some bargains.
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