The bearish cross of the 50 day MA under the 200 day MA for the stock market a few weeks ago was a bad omen, that turned out to be a pivot point in the opposite direction of what one would have expected. Since that time, stocks have bounced back strongly with the DJIA and the Nasdaq both moving above both their 50 day and 200 day moving averages. The only hold out, unless you want to count international stocks, seems to be SP 500, which ended the day at its 200 day MA of 1,115. Should that break through tomorrow and hold over the next couple of days, look for that to provide needed support for the stock market over the next few months.

Last week we made a couple of suggestions on how to play the bearish trend in the market, but the market has bounced back since then, so both of these trades are under water. While the conservative Bear Call Spread above the market can still turn into a winning trade if the 200 day MA provides some resistance to the SP 500, the more aggressive Bear Put Spread below the market is one that you should have cut your losses on when it went south as the market headed north a few days ago.

JD