The Dow rose 5 points today, but that headline eliminates all the price action that occurred today.
As mention yesterday, we are still trapped between the 20 and 50 period moving averages as defined support and resistance on the daily charts.
The Nasdaq is also trapped:
The S&P 500 sits comfortably on its moving averages (now support zones):
Now, today was an interesting day from a price perspective. Yesterday, I mentioned that moving averages can be used to generate trade ideas on lower time frames. Today was proof positive of that statement.
However, instead of behaving ‘nicely,’ price penetrated the moving averages slightly in both directions before reversing – in essence, a semi-trap occurred today.
The market is clearly trapped between the buyers and sellers, and both sides today fought a convincing battle, yet neither side won. I personally give victory to the bulls, because analysts keep listing so many reasons why our economy is headed towards a recession, housing is collapsing, oil is rising, yet through it all, the bull market – as of yet – has climbed this wall of worry quite nicely, even despite the recent ’suprise’ correction.
We are still in a technical uptrend, especially on the weekly charts, and therefore odds do favor trend continuation until proven wrong. Regardless of the news or how you feel, more money tends to be made in the direction of the trend rather than fighting it.
Until proven wrong, and despite how negative other bloggers or the media get, we are still in a technical confirmed (long) uptrend in the Dow and other major market indices.