Thursday was a good session for the S&P 500 with the index reclaiming 4,200 resistance.
Two days ago it looked like the market was breaking down, today it looks like everything is under control. And so goes the swinging pendulum of sentiment.
But this shouldn’t surprise readers of this blog. As I wrote Tuesday:
As bad as this felt midday [Tuesday], the close was robust and showed most institutional investors are not taking profits and still holding for higher prices. How we finish always matters more than how we start and despite [Tuesday’s] red close, this qualifies as a good finish.
Two days later and the index is back near the highs. Blink during these dips and you’ll miss it!
The trend is higher and that gives the advantage to the bulls. Bears are the ones who have to prove something changed and they definitely didn’t get the job done this week.
Bouncing off of support and returning to the highs shows bulls are still in control. Keep doing what has been working, which is holding for higher prices and lifting our trailing stops.
This bull market will die like all of the others that came before it, but this is not that day.
As well as the index has been trading, Tesla (NASDAQ:TSLA) appears to be stuck in the mud.
The stock slipped under $700 support on Monday and it has been unable to reclaim this key support level ever since.
TSLA has been underperforming the index all year and that trend continued Thursday as the stock finished in the red on a good day for the rest of the market.
At this point, it looks like the stock is headed back to $600 support. And if that doesn’t hold, then there is a lot of clear air down to $400.
Traders with with profits should be looking to protect them and aggressive traders can short this stock with a stop just above $700.