Karpel’s Corner: Gap and Go, will this Bounce Hold?

Welcome to Karpel’s Corner. This is where I throw out my thoughts on the markets and share some of my favorite strategies. I keep it market-focused, and never miss an opportunity to teach trading strategies and commentate on the latest trends affecting the financial markets. Hope you enjoy today’s post!

There was quite a reversal in fortunes in the last two market sessions. The S&P 500 ($SPY) has retraced the full pullback from last week, when it broke to the downside and sliced through the 200-day moving average at $189. It is now trading back above the long-term price average, settling at $190.53. This gives momentum back to the bulls.

Volatility ($VIX) is also confirming the reversal to the upside, with the Fear Index pulling back over 15 percent . Short-term bullishness should prevail if the S&P 500 is able to hold above the 200-day moving average.

There are two sectors that are struggling: Retail ($XRT) and Regional Banking ($KRE). A breakdown in these two sectors would weigh down the Small Caps ($IWM), which in turn would put any upside by the Large Cap indices ($SPY and $QQQ) into question.

See you next time at the Corner!