(By Michael Harris) Life will not be easy for bears even if in the market will resume its downtrend. These violent short squeeze sessions like the one we had yesterday inflict too much pain on bears. Anyone who can just spot a bearish or bullish longer-term pattern with high probability of success from recent price action is in my opinion a victim of wishful thinking. This market hides well its intentions and it will reward only true believers, one way or the other.
SPY closed about 34 cents above its 30-day moving average at $141.35 and it is now looking forward to testing important resistance at the 50-day moving average at $142.83. This level acts as a strong attractor when price is away from it but turns to a repellent area when price gets very close to it for reasons that may be discussed in another blog. The gap left open from yesterday just above $140 will put pressure for its closure at some point in time, maybe during the next two weeks.
In my opinion, anyone looking for patterns in this price action other than support and resistance and moving average levels will not have a lot of luck. This market acts in ways as to maximize the gains of those who move it, naturally, slaughtering bears and squeezing out weak bulls. The market's intention may become clear when the fundamental outlook will become clear. This market will show to mercy to wishful thinkers.
Disclosure: no relevant position at the time of this post and no plans to initiate any positions within the next 72 hours..