fbpx In focus: Bears try to take over | Option Strategist

In focus: Bears try to take over

By Lawrence G. McMillan

The Standard & Poor’s 500 Index was not able to make new highs over the past week. In fact, selling set in and knocked the market down. However, there is still a general bullish overtone to the indicators, and so the bulls have certainly not capitulated yet. Ostensibly, the catalyst for this selling is the continuing, worsening situation in Japan. However, it is just as likely that the market had reached too much of an overbought condition, and that had to be worked off — which it has been, for the most part.

Let’s start with the chart of S&P 500 (SPX 1,312.07, -2.34, -0.18%)  itself. It has now pulled back to the 1310 area (which is roughly the low for each of the last two days). That is also the level at which the rising 20-day moving average now stands. Thus, so far, all SPX has done is pull back to its rising moving average. Even if it penetrates slightly below that — to 1300, say — it will still be a bullish chart. However, a decisive close below 1300 would change the picture from bullish to bearish.

To read the full article, subscribe to The Market Watch Options Trader.

Share this

Option Strategist
Blog Search

Recent Blog Posts

Trading or investing whether on margin or otherwise carries a high level of risk, and may not be suitable for all persons. Leverage can work against you as well as for you. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. The possibility exists that you could sustain a loss of some or all of your initial investment or even more than your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and investing, and seek advice from an independent financial advisor if you have any doubts. Past performance is not necessarily indicative of future results.
Visit the Disclosure & Policies page for full website disclosures.

-->