Off the Charts

The market's recent malaise continued Monday as the indices trended lower for most of the session and closed on their lows. The S&P broke below a key support area at 1671 on Thursday and has since been unable to find its footing. Today, despite some early strength right off the opening bell, the index saw a clean break below its 50-day moving average. If that level is not recovered within the next two to three sessions, it could lead to a test of deeper support. The S&P finished the day down 0.59%.

While the market continued to the downside today, we came in this morning saying it was hard to initiate new short positions at these levels. The market has only been this oversold twice in 2013 and is coming off its worst week of the year. When game-planning any trade idea, the most important factor to consider is the risk-reward ratio, and right now new short positions are not compelling. That doesn't mean you should blindly buy at these levels, but I am more inclined to look for calculated reversal entries at these levels....533 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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