Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money

73% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

  • News

Mish Schneider How does the market look from a technical perspective?

The markets have certainly been unpredictable over the last week, but Mish Schneider looks away from the GameStop drama to focus on the wider picture.

Dow Jones [DIA] sits alone under the 50-day moving average, while the Russell 2000 [IWM], Nasdaq 100 [QQQ] and S&P 500 [SPY] cleared Friday’s highs and remain above their 50-day moving averages (50-DMAs).

Though only the Dow Jones ended under the 50-DMA, it still had an inside day which shows digestion of its current price area.

This is a hopeful sign for Tuesday compared to where the market left off on Friday of last week, as not only had the Dow Jones broke its moving average (MA) but the S&P 500 had as well.

If both had continued to head lower, a small correction could easily escalate to a bigger correction.

This does not mean we should let our guard down, but it does show that the market is holding its bullish phase.

We define a bullish phase by the location of price compared to the major moving averages.

For instance, bullish phase criteria is created when the price of a security is over the 50-DMA and the 50-DMA is over the 200-DMA.

The next phase where the Dow Jones currently sits is the caution phase.

This means the price is under the 50-DMA while the 50-DMA is over the 200-DMA.

Friday’s close had us concerned because of where the prices closed relative to the 50-DMAs.

If today had closed red, then that would have been a good sign to keep a close watch and take some risk off the table.

Furthermore, high yield corporate bonds [JNK] closed over its 50-DMA which indicates investors and the government are still supporting the risk on environment.

At least for now… stimulus is key.

This article was originally published on MarketGauge. With over 100 years of combined market experience, MarketGauge's experts provide strategic information to help you achieve your investing goals.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Continue reading for FREE

  • Includes free newsletter updates, unsubscribe anytime. Privacy policy

Latest articles