S&P 500 Levels & Analysis for 9/24/10

The SPY experienced a wild ride on Thursday, but at the end of the day it was the sellers who took control and now the market has closed below the important 113.20 level and below the 5 DMA which has now flattened out, one of the biggest issues the editor of my book was my run on sentences, these posts aren’t edited.. Back to the market.  The market found support right at S2 on Thursday, but now that the market is below the 5dma we have to look at the intermediate term trend as “guilty til proven innocent”  It doesn’t mean the market cannot recover, but trading is about probabilities and right now the best odds are to have locked in profits or have hedged your longs and to be selectively trading the short side until the market can stabilize and reclaim broken levels of support.   The rally of the last few weeks has created a feeling of confidence amongst many participants, don’t make the mistake of a strong market think you have this beast mastered because it is in those moments that we are most vulnerable to giving back our gains.