Dear readers, the bounce is here as bigger time-frame buyers from the weekly time-frame stepped in to scoop up beaten down shares. In my opinion, this bounce should have some legs for at least one week or more. I have to admit that the low volume gain is very questionable since we are all trained to look for the huge volume normally associated with such a power move up. My hypothesis is that there are many investors who are still hoarding cash on the sidelines. If prices continue their uptrend, then these late buyers should be tempted to step in to buy. In other words, this rally should still have some way to go.
BAC Weekly Chart - Bigger time frame buyers stepping in to support at $6-ish area. Closing above the $8.54 mark for this week is absolutely crucial for BAC bulls as that would mean more buyers coming in the following week, thus pushing prices higher up.
BAC Daily Chart - I would take some profits off the table at the 50day MA mark and trail a stop loss to protect the rest of my profit.
Trend traders are already starting to cover on some stocks such as Bank of America (BAC). Note the close above the Ichimoku Kijun line, which served as the stop loss for trend followers who are short. Once these group of traders are out and with the late longs in, I am expecting some sorts of reversal at these areas. I would suggest that all longs take some profit off the table when/if price action move nearer to the 50day MA or below the Ichimoku clouds which should serve as major resistance.
It's anyone's guess whether stocks will continue to move higher or retreat at these resistance area. For aggressive traders who want to place their short bets, the best entry point would be at the area where the last of bulls exhausted itself. However, if the market really wants to go higher and goes into a consolidation phase instead, the prudent trader would do well to reverse his shorts and go long.
Good luck!
BAC Weekly Chart - Bigger time frame buyers stepping in to support at $6-ish area. Closing above the $8.54 mark for this week is absolutely crucial for BAC bulls as that would mean more buyers coming in the following week, thus pushing prices higher up.
BAC Daily Chart - I would take some profits off the table at the 50day MA mark and trail a stop loss to protect the rest of my profit.
Trend traders are already starting to cover on some stocks such as Bank of America (BAC). Note the close above the Ichimoku Kijun line, which served as the stop loss for trend followers who are short. Once these group of traders are out and with the late longs in, I am expecting some sorts of reversal at these areas. I would suggest that all longs take some profit off the table when/if price action move nearer to the 50day MA or below the Ichimoku clouds which should serve as major resistance.
It's anyone's guess whether stocks will continue to move higher or retreat at these resistance area. For aggressive traders who want to place their short bets, the best entry point would be at the area where the last of bulls exhausted itself. However, if the market really wants to go higher and goes into a consolidation phase instead, the prudent trader would do well to reverse his shorts and go long.
Good luck!
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