Bulls Remain In Control, But Profit-Taking Could Take Place

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Bulls Remain In Control, But Profit-Taking Could Take Place

By Scott Johnson on January 7, 2009 | More Posts By Scott Johnson | Author's Website

After Tuesday’s close, the US market has extended itself into overbought territory, with the buyers retaining control of direction. Looking at the chart for SPY (SPY), we can see price sitting just above a significant support level. After today’s controlled buying, the proximity of support gives traders relatively clear levels for entries and placement of stops.

The McClellan Oscillator shows us to be significantly overbought.

While the bullish momentum could easily continue, profit-taking could also kick in, setting up some better entries. Given this combination of circumstances, I will be trading lightly until clearer setups emerge.

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