The US stock market has formed a mini upward trend since August 22nd. However, it has yet to be seen if this is a short covering rally or something more. Ideally the S&P 500 should trade above both it’s 50 day and 200 day moving average before entering back into the market.
The 200 day moving average is where we see more volatility as this is the “line in the sand” for many traders. Sellers will be focused on the poor economic numbers while the buyers will be focused on the hope of a QE3 stimulus package.
For now this is a short term trader’s market.