Don’t Be Fooled by This Bull Trap

Don’t be suckered back into the market from a bull trap, this is what to really expect… [Jeff Clark's Market Minute]( Don’t Be Fooled by This Bull Trap By Jeff Clark, editor, Market Minute Watch out! The stock market’s spectacular intraday reversal on Friday may turn out to be a bull trap. Bull traps are moves designed to sucker folks back into the stock market just before another large down-draft begins. And Friday’s action had all the telltale signs of one. Recommended Link [Biden v. Who in 2024????]( [image]( I predict that the REAL battle for the 2024 election is NOT between Joe Biden and Donald Trump. It will be between Joe Biden and ____ _____. (It’s NOT RFK Jr.) [Click here to see who.]( -- Seemingly Good News Stocks were selling off for most of Friday’s session. By midday, the S&P 500 was trading below the 5200 support level. The Volatility Index (VIX) was spiking higher – showing an increase in investor fear. It looked like the market was poised to fall off a cliff. But then, in the final hour, we got the sort of “gamma-squeeze” we’ve seen with increasing frequency since the creation of 0DTE (zero-days-to-expiration) options (you can read up on this [phenomenon in this essay](. The S&P recovered some of its losses and then bolted higher to recover all of its losses – by the end of the day it was up nearly 1%. The buying pressure continued yesterday morning. And now, lots of folks are talking about another move to new all-time highs. Those folks may be right. But, there is one glaring problem. We Could Be in for a Big Decline The Summation Index for the NYSE flipped to a sell signal last week. Take a look… [(Click here to expand image)]( This Summation Index is another technical tool for measuring market momentum. Whenever the NYSI rallies above its 9-day EMA (the blue line on the chart), it indicates that momentum is turning higher – and that’s usually a good time to buy stocks. Whenever the NYSI falls below its 9-day EMA, momentum is waning. That’s usually a good time to sell. The red lines on the chart show the sell signals over the last two years. Here’s how those sell signals lined up with the S&P 500… [(Click here to expand image)]( Three of the four previous NYSI sell signals led to an immediate decline in the stock market. The decline last May was quite mild – just over 100 S&P points. But the declines this past April and last August were more significant. There is no way to know if the current NYSI sell signal will lead to a small decline or a large one. Heck, it might even lead to the market just marking time for a few sessions before stocks blast higher again – like they did in January. Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. So, I’m not suggesting folks liquidate all of their positions and take a full 100% short trade. I am suggesting, however, that rather than getting caught up in the current casino-like atmosphere of the stock market, folks might want to be a bit cautious here. NYSI sell signals have a good track record. So, until this one is negated – with the NYSI closing back above its 9-day EMA – it is possible, even likely, the bounce that started last Friday is a bull trap. Traders should approach it with caution. Best regards and good trading, [Signature] Jeff Clark Editor, Market Minute [Jeff Clark's Market Minute]( Jeff Clark Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.jeffclarktrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Jeff Clark Trader welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-752-0820, Mon–Fri, 9am–7pm ET, or email us [here](mailto:contactus@jeffclarktrader.com). © 2024 Omnia Research, LLC. All rights reserved. Any reproduction, copying, or redistribution of our content, in whole or in part, is prohibited without written permission from Omnia Research, LLC. [Privacy Policy]( | [Terms of Use](