Still Trending Down?

Today was pretty bullish looking in the markets. The dollar experienced a massive 1 day sell-off while yields were falling at the same time. This sent gold and equities to the upside. This was likely caused when the Bank of England announced it will conduct bond-buying operations. This sent yields lower globally which is good for markets in the current high inflationary environment. The Central Bank of England could possibly be buying too early but central banks typically do not lose money. So investors piled in to risk equities off of this news.

$SPDR S&P 500 ETF (SPY.US)$

The day looked very bullish as the NASDAQ outperformed the rest of the major indices with nice gains for a lot of big names like $Netflix (NFLX.US)$ gaining over 10% at one point. But technically speaking we are still in a downtrend in the markets. As you can see in the picture below the price of SPY has been falling for several weeks. But its price is near a technical support level from the previous 52-week lows. That factor could have contributed to the bullishness today. Also note that the current downtrend has been very quick so some green days can be expected on the way down to cool off the overheated sell-off.

The macro environment is still very bearish for equities. So naturally one would think that any bullishness will be very shortlived. But like I've been saying, the market does not go down in a straight line every day. There are small corrections or bounces on the way down. If you are a short term options trader then there may be a good opportunity to go short at this resistance for a quick day trade. But you would definitely want to wait until a rejection of this resistance is obvious. Or if the price breaks out to the upside of this very short-term price channel, and there is increasing volume and momentum to the upside, then there might be a profitable long opportunity on the very short-term timeframe. In a bear market investors should be looking for short opportunities but sometimes the upside moves cannot be ignored.

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