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Stocks at resistance - beware of breakout

Commentaries & Views

Stocks have continued their ascent, but a caution to the bulls: Price is tagging major resistance. Although there is a possibility of an upside breakout, the probability is that even if a breakout occurs, it is too late in an upward thrust, with momentum waning; hence any breakout will be very susceptible to reversal in this trader`s opinion.

The below daily chart of the SPY shows the power of price gaps, with two gaps waiting to fill the downside:

The gaps may need to fill before another leg up in stocks can begin. Certainly, the first gap is a flashing target for any traders looking to flip to the short side.

Thanks and have a great day.

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