It’s been a long day on July 1. Many people could probably have passed a verdict on the market for being bearish until the second half of the day. The Dow made a strong rebound, reversing the 160 points loss at the lowest point in the day, to a 32 points gain. With little regurgitation from the high, I can expect the market to open on Tuesday with a higher gain. Yes, I believe the market on the path of a rebound in a bearish market.

On the chart, I can see the Dow formed a bullish Hammer candlestick pattern in high volume. This is a sign of strong bull for the next few days ahead. So, do prepare for this to happen. The rebound can reach one of two resistance points as shown on the chart. The first resistance target is more likely a point to see a reversal back to the bearish trend especially under the current poor market sentiment. If no reversal is seen at this point, then it may go all the way up to the second resistance, which is considered a stronger resistance. This is area where both the 50-day moving average and the Fibonacci 50% retracement lie. Certainly, the Dow can make reversal at any point in between of these levels. To play safe, I suggest we wait for that reversal to occur before we start going back to the market again.

Now, we can forget about watching the break of technical support for all other stocks. Even in the case of Apple, we have to change our mind for any bearish breakout to show. Incidentally, it made an impressive rebound from 200-day moving average. I expect more bullishness ahead.

Guys, please stand by. We have plenty of fishes swim our way. Get your gears ready to begin dropping all the lines you’ve got. Enjoy the profitable trades.

DJIA Daily Chart

The S&P made a nice rebound right on the support I identified earlier. I am targeting the resistance levels as shown on the chart below for selling into the bear again (or buying puts).

SPX Daily Chart

The Nasdaq follows the Dow and S&P to make rebound. Since it did not rebound from the oversold zone, it may retrace as high as those of other indexes. Anyway, I put the resistance at 1960 for practical trading purpose.

NDX Daily Chart

STOCKS TO WATCH:

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