April 25 Trap Reversal Intraday Trading Update

Apr 25, 2014: 12:18 PM CST

With today triggering a “Bull Trap” reversal outcome (at least so far), let’s take a look at our mid-day S&P 500 and Sector Breadth Update.

We’ll start with a chart of the mid-day S&P 500 and how we got to this point:

S&P 500 1-min Intraday Chart

First, be sure to brush up on this morning’s update regarding the broader Rectangle Trendlines which set the stage for this morning’s “Bull Trap” or reversal down against resistance (the re-entry under 1,870 triggered a wave of logical short-selling and long/buy liquidation).

For now, we’ll be watching the 1,865 pivot in conjunction with the 1,868 pivot which is central to our higher timefrmae chart (it’s the upper trendline).

The market is bearish (at least from that perspective) while it remains beneath 1,870.

Any intervention/rally that takes price back above 1,870 would place the market above the reference level and thus bullish (for no other reason that it would trigger a wave of stop-losses from short-term bears/sellers who entered under 1,870).

Sector Breadth is Bearish across the board (for  now):

There’s no question that Sector Breadth (broader money flow) is about as bearish as it gets today.

We see almost all Utility Sector Stocks ($XLU) up today except one (AES is the lone-wolf if you’re interested) while all other Risk-On Offensive Sectors (like Financials) are beneath 20% for their sector breadth.

Sector strength – if we can call it that – comes from Staples ($XLP) and Health Care ($XLV).

With that in mind, there are still stocks trending up today despite the wave of liquidation selling:

Uptrending candidates include Tenet Healthcare (THC), Dollar General (DG), Aon (AON), and Southern Company (SO).

Our downtrending candidates (and there are certainly more than the four selected above) include Visa Inc (V), Analog Devices (ADI), Garmin Ltd (GRMN), and EOG Resources (EOG).

As always, monitor the higher frame reference levels and any surprise breakthrough back above 1,870 (which would trap the sellers today).

Afraid to Trade Premium Content and Membership

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

Comments Off on April 25 Trap Reversal Intraday Trading Update

Comments are closed.