The market continued to get whacked. All of the major indices were down well over 1%. As I’ve been saying, the pullback has to stop pulling back at some point.
The Ps are now all the way back to their 50-day moving average. There’s nothing magical about this average but paying attention to “daylight” (see the MIM or come to the chartshow) can help to keep you on the right side of the market.
More and more sectors have lost steam. Plot your Bowtie moving averages (10 simple/20 exponential/30 exponential) and you’ll notice that many are rolling over. In fact, notice that these averages have turned down in the major indices. A Bowtie down sell signal from all-time highs is not a good thing.
Again, a few big up days would make a huge difference. Until/unless that happens, you might want remain cautious.
So what do we do? As I’ve been saying, waiting for entries can often keep you out of new trouble. So with the market sliding, it has become tougher and tougher to get triggered. And, after yesterday’s action I’m not seeing many new meaningful longs setting up anyway. I’m seeing some shorts but with the market oversold, I would avoid the short side for now. I guess that’s a long winded way of saying sit on your hands and let things shake out.
Speaking of “shake outs,” the market’s job is to frustrate and fool the most amount of people. Right now, it is shaking out longs and attracting eager shorts. I would avoid making any drastic decisions until we see who will be vindicated. Let the ebb and flow of money management (i.e. stops) keep you in or take you out of positions. And, again, avoid taking any new action for now.
Futures are flat pre-market.
Best of luck with your trading today!
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