The geopolitical context was to blame for this week’s sell-off in the market that basically erased the previous week’s gains, placing major market indices back at support level. So, what was the reason behind Monday’s rally? Actually, the bounce was expected for many reasons.
- First, we are now accustomed to traders and investors “buying the dip.”
- Second, we are still running in a strong, power trend on all large time frames.
- Third, it is the last two days of the quarter, and we are seeing money managers creating “window dressing.”
This is a short week for traders, but this does not necessarily mean small gains. With the market pulling back into support, it just gifted us another entry pocket that triggered for many traders looking to hop into some stocks that were perhaps extended and offered no entry point. The market is still looking bullish, and it might just continue this trend into late spring.
Two Market Gauges
QQQ
The QQQ started selling on Monday and continued throughout the week, bottoming out on Thursday when it hit support under the $104.00 area and the stabilized. On Friday, a buy pocket formed giving some clues to work with this week. It was once again proven that this area was bought and support held at least for now, and we are right on the money with our game plan. For the QQQ, we can expect a price continuation higher into a target area of $109.00.
SPY
We see the same price action for the SPY – hard sell-off into prior support at $205.00 last week. Friday’s price action remains neutral, keeping Thursday’s price range (low and high), and, sure thing, on Monday, the SPY opened this week’s trading session with a bullish gap up that puts it into a strong, up-trend, continuation pattern attempting to go again towards the 3/23 high at the $212.00 area
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