It Was A Fire Drill

In my last post, I used an analogy of someone yelling "Fire" in a packed theater to question the pullback from last Friday and Monday to be the beginning of a new down trend or just a consolidation to the recently rally, as to the "Fire" alert to an actual fire or simply a fire drill. Looking at the recent price actions and how some of the indices and stocks breaking above key levels, the recent pullback is more like a fire drill than an actual fire.

Does it mean all coast are clear for the bulls to run? Absolutely not. We are still in a bear market. Right now, the market is sending out couple messages. The first one is it is going higher, and the second one is it is getting ready to reverse. What I am seeing from my inspection of the stock charts is majority of them are either hitting trendline resistance or getting near 200 SMA resistance. These resistance can be the infection point for reversal. Until these resistance are broken and tested, I will be very cautious on being too bullish on this phase of the bear market rally.

Instead of putting up the usual charts, I decide to post a picture of one of my trading screen to highlight some of the stocks that are hitting/nearing resistance. In this screen, there are 30 minutes, 15 minutes, and daily candlestick charts.



In my next post, I will revisit those levels I have mentioned in previous post to get an assessment on what the market will do next. Until then, trade attentively as reversal can come with very little notice.