Still Buying the Dips

04/16/2015 7:00 am EST

Focus: STOCKS

Ryan Mallory

Contributor, Share Planner

Based on Tuesday’s test for the bulls as price threatened to give back gains, Ryan Mallory, of SharePlanner.com, offers his technical outlook for the S&P 500 for Wednesday given the fact that the market doesn't care about the economy or earnings, only about what the Fed is doing to keep equities propped up.

Technical Outlook:

  • Tuesday was a significant test for the bulls as price threatened to give back much of the gains of recent days. Instead, the dip buyers came in and returned the market to the green for the day.
  • Price action formed a nice hammer on SPY with a candle shadow that bounced right off of the 10-, 20-, and 50-day moving averages.
  • VIX, after an initial surge early on, finally dropped off, falling 1.9% to 13.67.
  • Tuesday's intraday sell-off formed a very nice higher-low on the SPX 30-minute chart. Very possible we add a higher-high to that price pattern at 2108 or higher.
  • The price moves of late aren't as big as we have become used to seeing. The volatility has dropped off significantly.
  • Volume was once again light on SPY Tuesday.
  • This is strongest/most bullish market that we've seen since early February.
  • Double bottom on the 30-minute chart was confirmed on Friday.
  • Bears are quickly losing their grip on this market—needs to get price back below 2040—which is a good ways away now.
  • The convergence of the 5-, 10-, 20-, and 50-day moving averages is a perfect example of how non-directional this market has been over the course of this year until last week.
  • The market doesn't care about the economy nor earnings. That is not what is driving it. The market only cares about what the Fed is doing to keep equities propped up.

My Trades:

  • Added one new long position Tuesday.
  • Sold BEAV Tuesday at 61.34 for a 1% loss.
  • 50% long / 50% cash.
  • I'll consider adding 1-2 new long positions Wednesday dependent on the strength of Wednesday's price action.
  • Remain long: UPRO at 132.12, AAPL at 126.81, ETN at 68.88, FB at 83.32.

Chart for SPX:

chart
Stocks Continue to Rebound Led by Nasdaq
Click to Enlarge

By Ryan Mallory, Founder, SharePlanner.com

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