The market on Monday was a non-event. The markets are consolidating for a continuation of the current trend – which is bearish. The SPX chart is particularly more revealing than other major index charts. It has formed a Doji. This means investors are re-assessing their portfolios to decide for the next investment move. As the prices move higher, the volumes are getting lower. This is a price-volume divergence – a bearish signal.

As a practical trader, I will still bet on the bear market. In the absence of a signal, I will only be interested in the Bear Call for now. The short options can be placed at 12500 for the Dow and 1390 for the SPX. There can be more we can exploit these indexes. We will come to those later.

The Nasdaq is establishing itself as a sideways market. There is no breakout on either side at the moment. However, there is risk for a bearish breakout if both the Dow and the S&P crash through their supports. Nasdaq is good for short selling and put buying when the window of opportunity present itself. Let’s be patient.

The Apple Computer (AAPL) trade we spoke about in the past few days did not materialize. Although there is still a chance for a downward move, we may want to prepare to leave the trade or skip it. When a new breakout occurs, we can re-enter.

The 20-, 50-, and 200-day moving averages are beginning to converge together. Nasdaq is heading for sideways. I have identified the support and resistance. Watch these levels for future direction.

Apple Computer (AAPL) sprang back from the support. This makes my RSI analysis a strong tool. The break of 50-day moving average did not result in more bearish moves for the stock. As I mentioned in my last couple of posts before, Apple had not breached the RSI 40 line. Which means, the bear market for Apple had not been well established. Anyway, to be cautious, we just have to wait for RSI breakout before we make the next trade decision.

STOCKS TO WATCH:
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