Rebounding

The market rebounded from the oversold condition. The SP500 bounced back up to test the 200 SMA near the 1100 level. In the short term, the SP500 most likely will attempt to reclaim the 200 SMA. However, there could be another test down in the 1065 range before the SP500 can decisively reclaim the 200 SMA and start its move back toward the 1175 level.

Tomorrow is the Friday of a Monday holiday (Memorial Day), and trading traditionally is light on a Friday before a long weekend. Therefore, depending on the market’s activity level for tomorrow, I will not read too much into it. Next week, I will be watching closely on how the SP500 reclaim the 200 SMA and how it holds up to the 1065 level if it drops down to test it. The reaction from the SP500 at these levels will give me a good picture on where is the market heading next. Until then, the current market condition still favors the short term trading strategies.