It took a grand total of five minutes for the market to overcome a five percent drop in the price of oil and ultimately push the indices back into the green, erasing all the hopes and dreams that the bears came into the week with.
So far today, the gains the market is experiencing looks to be on the heals of those being forced to cover their short positions.
However, the market is running slap into heavy resistance here, and I’m not one that is looking to suddenly buy into this market rally. Instead, with the market hitting its head on declining resistance off of the July highs, and not able to push through the upper bollinger band (a theme going back to July of 2014), I would suggest that the market has limited upside, and far greater downside.
The problem with that, is that you can only test this theory slowly – get extremely short right here, right now, you are looking at a random 20 point gain in the market that flushes you out a whole host of short positions. Test the short side with just a small amount of capital, you can get out if the trade doesn’t work with relative ease.
That is what I am attempting to do here.
With that said, here is the bullish watch-list for the week. I don’t have positions in any of these, but there are some attractive long setups – just take a look at Chevron (CVX).
Here’s the bullish watch-list:
