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S&P 500 at New Highs… so what!?


How are you doing my fellow traders!? I hope you enjoyed your weekend? As I was reviewing the markets I had to address  what the media has been advertising recently. When we look at the headlines we can see that there is a lot of talk about how the S&P 500 made a move to all-time highs on Friday. This is very exciting - I’m thinking - for most traders/investors but when examine what is really happening here I can’t help but notice that the banks have only been focused on short positions lately. I can’t get this out of my mind because when you only look at the facts of what the market is doing and what is causing it this sticks out like an elephant in the room.


So what does this all mean to us? Will this market drop or continue higher?

 

There is no doubt the market can continue higher. All that would be needed is for the banks to come in and start buying this up but we have to see what is happening right now and I don’t see buying from the banks. Then I get curious and start looking at the charts to see if there are any strong structures being built and what do I see!?

 

The weekly chart has a very poor uptrend but a decent zone where price could respond from. 


The daily chart does not have an uptrend and a new KEY demand zone is being created, a zone I will be paying particular attention too.


 

So then why is price rallying? It’s the monthly chart. Look how the new demand was formed and we have since seen two momentum candles formed from it. Typical when that chart is dictating price. We are extended outward and now potentially basing (will know when month closes). What comes after basing? Either a drop or a rally higher… but since we don’t see banks buying now the odds are there will be a drop. Once again, unless they start buying this week.

 

So keep this in mind heading into this new week and let’s watch how this plays out.

 

 Kevin Araujo

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