We all have witnessed the central bank liquidity induced rip-your-face-off rally from December to early April and the subsequent sell-off to levels in the S&P 500 not seen since mid January. Big name brokers such as Credit Suisse barked loudly about their call of a move into equities and out of bonds right near the March/April tops much like last week some of them turned bearish.
U.S. equity indices like the S&P 500, Russell 2000 and Nasdaq 100 are at levels that have a confluence of technical support. Mind you given the herd mentality of market participants these levels could be washed out quickly but the confluence support zones do put the odds in favor of a bounce.
The S&P 500 for example is nearing its 200 day simple moving average, retraced 61.8% of the Dec – April move, reached its head and shoulders pattern target, and is back at former resistance level (now potential support(ish) near 1290 – 1300.
Rather than picking tops and bottoms however I am more inclined to prepare myself for a more volatile sideways market move in coming weeks. This sideways (rangebound) move may be 1290 – 1360ish in the S&P 500 and for intraday and quick swing traders that spells opportunity. V bottoms happen but until we get above 1360 – 1370 I am looking to play the aforementioned range with quick jabs
