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.
Let’s get to the analysis:
John Jagerson and Wade Hansen, Slingshot Trader
Traders are going to continue to watch the Fed’s Permanent Open Market Operations for clues as to which way the market is going to go. If you see the market continue to fall after the Fed steps in and buys a large amount of Treasuries, watch for continued weakness ahead. Conversely, if you see the market start to rebound after the Fed wraps up its buying for the day, watch for a continued rally that day. As we have said in the past, we recommend a balanced approach of puts and calls.
Jon Markman, Trader’s Advantage and CounterPoint Options
I still believe that there will be a “reset” of expectations that will lead to a 5% to 9% decline in stocks this year, because that is a normal psychological event. But timing that decline has been very tough, as the more that central banks ease, the more interest rates and risk-taking will swell.
If you are looking for one catalytic event that could precipitate that kind of decline, it could come in the form of a downside surprise in a major economic statistic. Non-farm payrolls were just released today, with positive results–jobs were up 88,000 over March, and unemployment has ticked back down to 7.5%. So it’s not likely to be today, but keep an ear to the ground for those kinds of reports that could shake up the market.
John Lansing, Parabolic Options, Trending123 and Power Trading at the Open
Since November, the S&P 500 has been in a long uptrend, but just like in the Russell 2000 ETF (NYSE:IWM) we’ve been range-bound for the past couple of months, and I just don’t think that the channel is going to hold. With that said, it needs to back-test to that lower support around 1530 first. Do I think it’s going to be sooner rather than later? Absolutely. But as we saw yesterday, the market is flirting with the 1600 level currently. The first sign of a prolonged downtrend will be a backtest, and then a break through the 50-day MA.
Ken Trester, Maximum Options
Our indicators are giving bullish readings, unchanged from last week, even with a 130-point-plus Dow pullback on Wednesday. In fact, the indexes remain comfortably above their 50-day moving averages, which are the first support levels in the ongoing bullish trend. Those averages are now at 14,480 for the Dow, 1555 for the S&P 500, and 3235 for the Nasdaq.
Looking at the overall market, those support averages could be more important than many think. Several sub-indexes have recent patterns of trading down to their 50-day moving averages, only to bounce off them. It’s not hard to imagine what might result if those support averages suddenly fail. Massive hair-trigger selling, most likely.
If you like this kind of lively back and forth, you’ll love the 24/7 Trader’s Talk Forum, coming soon.