The bulls on the other hand, have an increasingly unified Europe, hints of stimulus out of China, and strength in the housing sector. With that they've done everything they could to keep this market from completely falling apart.
Today the $COMP once again got back above the 200 day MA (by the skin of it's teeth.) Here's what that looks like.
Usually round numbers hold only a psychological importance. But now with so much up in the air in the markets, psychological importance take on a new found relevance. With a flattening 200 day MA, and everything converging on this one point in time and price; this round number is a big deal.
The bulls need to take out the recent swing high of 3030.28 and that would complete what looks like an inverted head and shoulder pattern.
Let's say a deal is reached to raise taxes and cut spending; the $50 billion proposed stimulus would only lighten the blow. It also could be looked as a waste of money if not done right. And to do it right, we need to invest in things like education and research. These things tend to take time to bare fruits. So a cliff deal could lead to a big shorting opportunity.
A lot of people have noticed the inverted H&S in the markets. It would be a perfect fake breakout confirmation to short.
Personally, I'm leaning towards the bearish side because a look at the longer term charts show a noticeable contraction in the up moves. Here's what I mean.
We will see, and it will all start here at $COMP 3,000. If bulls can take this higher on an explosions of volume, chances get better for the upside. If bulls lose this area on big volume the opposite is true, and the chances of the market going down substantially go up.
Either way, we can make money traders. If we listen to the charts we will be just fine. What we can't do is be anchored in our beliefs about what this market should be doing. (Talking to myself more than anyone.) Good luck traders, and happy hunting!!