How To Cover Shorts Before Bulls Put You In Hospital
Bulls kick Bears butt and take the market higher once more. I’m short this stock market. Monday might be a strategic day for me because I will be looking to close out my short position and move to cash.
But, there is something critical I need to see from the bulls on Monday before I close out my short position. This is volume.
The volume over the preceding 3 trading days has been dropping into the up move. Although it is more than only that. We are approaching a significant resistance zone that extends from the 61.8% Fibonacci retracement level all the way up to the 50 day moving average.
Something that is very worthy of note is that buyers are drying up as we come up to that important resistance zone. That tells me one thing. With volume dropping, there’s no way bulls are going to possess the momentum to break through that key resistance zone. Volume has to increase on the buy side. Buyers must step in to this market in large numbers on Monday or Tuesday in order to smash through this level.
At this time like I said, I’m short this stock market. Therefore I am not moving to close out my short until I see proof of lots of buyers stepping in next week.
With the volume declining into this upward move, bears are gaining faith that bulls are not going to be able to smash the 61.8% Fibonacci retracement resistance or the 50 day MA line.
In this video I do technical analysis on SPY and illustrate to you what I am looking for next week in order to close out my short position and move to the sidelines.