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The Fiscal Pop-and-Drop for Equities. Look Out!


Today's gap higher in stocks has many investors feeling really good, but will this rally last?

Today's gap higher in stocks has many investors feeling really good, but will this rally last?

My to-the-point answer is yes, but there will be some bumps and the need to navigate positions along the way.

Looking at the charts below you will notice how stocks are trading up over 4% in two trading sessions, and several indicators and technical resistance levels are now being tested. Naturally when there are several resistance levels across multiple time frames, cycles, and indicators we must be open to the idea that stocks could pause or pull back for a few days before continuing higher.

Here is a quick snapshot of charts I follow closely to help determine short-term overbought and oversold market conditions.

Momentum Extremes

This chart helps me know when stocks are overbought or oversold. This trend can be followed using the 30- or 60-minute charts, helping you spot short-term tops and bottoms.

Stocks Trading Above 20-Day Moving Average

This chart helps me time swing trades which last for one to three weeks in length. I use the daily chart to spot these reversals and trends.

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No positions in stocks mentioned.

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