S&P500 is bouncing around 200 SMA in the past 3 days. Market is very oversold in the short term . I would like to see a bounce to 908-915 to trap hardcore bulls or as I call them "Incurable Bulls" then big move lower. If this scenario play out, the picture would be perfect, but obviously market doesn't care what do I think, It does what market does best. it would surprise us. We are in No Man's Land, we are at lower side the downtrend channel and near 880-875 support, therefore we are due for a bounce.
Next week GS,INTC,JNJ,IBM,JPM BAC,C,GE, will announce their 2Q earnings.
Thas should drive the market. Banks probably will come with better than expectation earning due to:
1) Relaxation of accounting rules by FASB from "mark to market" to "mark to model"
2) Fix income earning. They receive 0% APR from Fed and Treasury and lend +5% rate to businesses.
3) Short term investment in securities, they mostly use the TARP founds to trade securities instead of lending to businesses.
S&P500 Bull Trap scenario:
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