Sunday, June 16, 2013

20 and 50 Day Simple Moving Average Sandwich

Updated for CIEN / KBH trade and 2nd buy on 6/12
Updated for 2nd buy on 6/12

I follow 5 major indices (SPX, NAZ, RUT, DJT and DJI) closely.  Three of those indices (DJT, DJI and SPX) are now trading slightly above their primary downtrend lines.  That is bullish.  The remaining two (RUT ad NAZ) are still trading below theirs, not so good.  Also not so good is that all five major indices can't  get over the resistance at their 20 D-SMA's.  Breaking through that resistance soon  is critical if current bull run is to continue, otherwise 50 D-SMA's would fail and indices would head down to test their 100 and 200 D-SMA's.
Chances are good this coming week that more selling hits all markets.  A retest of of SPX 1600 Cash early in the week is likely, but by Thr or Fri we should see at least two or three major indices above their 20 D-SMA's.  Once that happens, remaining indices will follow suit and we would be on our way to challenge recent all time and multi-year highs.

My plan is exit all longs should we get a solid and heavy close below 50 D-SMA for SPX (not likely).  If SPX rallies and closes above 20 D-SMA, I would do my 3rd buy as it comes back down to back test 20 D-SMA.

Disclaimer: The views expressed are provided for information purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.