Bears in control? Can a dip be bought?

Good morning fellow traders and welcome to a new day on Wall Street!

Please find below the most important charts of the day:

$SPY chart

Yesterday we had a decent pullback in the overall market in the first few hours of trading as several stocks attempted breakouts to the upside but were subsequently sold. We reached a low of 448.86. This will be the battleground between active bulls and bears for today. With futures pointing to a down open, and with the European Central Bank meeting in focus, expect volatility to continue to increase. For better action, see if any sectors can show some relative strength and push the $SPY above 451. We advice caution before buying a dip, as it can turn out to be a falling knife. We have seen this tape last year as well, and the best approach is to stay out of the way until the dust settles. September is historically a weak month for equities so keep that in mind before committing too much capital.

$QQQ chart

The tech sector has been leading the market in the past few weeks but yesterday it showed some relative weakness. Important stocks within the sector such as $AAPL and $FB have been sold, while other posted sell reversals such as $NFLX. For today, we are watching the 378.5 level to see if the bears can be in full control and drive the price below it and keep it throughout the day. For better action, see if the bulls can come back and reclaim 379.5. In order for this to happen we needs some big tech names to act better and show some commitment to the recent active sequences such as $AAPL, $MSFT, $AMZN. If yesterday’s low does not hold, be careful buying a dip as there is a gap on the chart down to 375.

$IWM chart

The small caps are an important barometer for the health of the market. The small caps measure the investors’ risk appetite. The recent downtrend and yesterday’s gap down point to further weakness in the overall market. Watch this ETF for clues about the next actions of the market. See if yesterday’s low holds at 222.63. For better action it needs to quickly reclaim 225 which is now a big resistance level.

$MSFT chart

The software giant has been in a downtrend for the past 6 sessions. Yesterday it reached a low of 297.47 around its 21EMA, which has been a buying opportunity in the past months. In the last hours of trading it managed to post a decent reversal as it reclaimed Tuesday’s low and even went green for the day. Keep this stock on your radar for today to measure the strength/weakness of the tech sector. For better action it needs to reclaim 301. A break below 297 will keep the bears in control for now.

Have a successful trading day! Keep in mind that volatility might increase, know your levels and what you are committed to. Do not buy a dip too early until you see a clear picture. Cash is a position! For more updates, please follow us on our social media channels and we welcome you all tonight on our Youtube channel for the Daily Video.

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