I wasn’t looking for an upside opening on Monday morning, but a brief upside pop to start the week gave short-sellers a nice opportunity to hit the short side of the market. As I indicated to members in my Sunday afternoon video report, I would be looking to short any upside market open the next day. And so, we opened to the upside on Monday, giving short-sellers an easy lay-up to enter short positions, and the market then promptly reversed sharply to the downside.
The move took the NASDAQ Composite Index below its 50-dma, but the NASDAQ 100 Index, which had been the epicenter of selling over the past few days, found support at its 50-dma. This set up a logical context for a reaction bounce. We got that yesterday, thanks to some news out of Bloomberg regarding the alleged restarting of trade talks between the U.S. and China.
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