An initial rise in the market was met with large supply in the afternoon pushing the Dow under 10,000 yet again. A wave of demand came in in the last half hour pushing the markets up into the green. The market is still barely holding up over the ascending trend line (see chart below).
A speech by Obama tonight might rattle the markets tomorrow. 1040 on the S&P has been the magic number causing the market to rally in the short term as soon as it hits right on the dot. Seeing as it’s been an important support that was hit six times this year, three of them being the past three days; one can expect a strong emotional reaction should it get broken. It would also confirm the continuation of the mid term down trend and most likely would send the S&P down to the 1010 area. That being said, should it reverse without going down any further and break the 1065 levels it would indicate a mid term uptrend is in the works and could be seen as an entry for swing trading long positions.
As we saw today, the market wants to rally since it pushed up on news that wasn’t especially good. Tomorrow the Bloomberg consensus on the economic data all points to slightly positive results. A disappointment could be all that’s needed to break that 1040 level. A positive result would likely send the markets rocketing up due to pent up demand.
It’s definitely a tough market to trade in currently. I am personally lowering my risk exposure to compensate. The direction is unclear to say the least. The only thing to do is be prepared for all scenarios and trade small.