Where Is This Heading

Now that option expiration has passed and the Fed meeting is over, we can finally get back to watch where the market is heading. In just a couple trading sessions, the market has given us a sense of change is in the work. This mean trading pattern will be different than the last month or so where it been moving more in a sideway pattern. If the market is heading down, expect the volatility to increase. Let see what the market is telling us.

From the DJI daily chart, it is still hanging inside the price channel. It has broken below the 20 EMA, 50 & 200 SMA. Unless it can move above the recent high near 8880 level before it breaks below the price channel, then this bear market rally has come to an end. (I have put up the 20 EMA to watch the short term trend, just another trend confirmation tool I use.)



The SP500 is also showing it is hanging inside its price channel. It has broken all three moving averages, similar to the DJI. If it breaks below the price channel, then 800 could be the next support level. To reaffirm the upward trend, it must move above the recent high near the 950 level.



In the tech heavy Nasdaq 100, it is trying to hold above the May's high. Unless it can move back into the price channel, it is very likely it will fall to the next support level near 1350.



As one can see from these market indices, the market is definitely at an inflection point where it can rally to newer high or it can reverse and go test the March 2009 low. I not am going to guess which direction the market will move. But I am preparing for the downside if it has decided to terminate this bear market rally. What I am expecting is within the next few trading sessions, the market will have decided where it is heading.