This Is Still Not This Type Of Market

Random Thoughts

The Ps dipped lower but did manage to close off of their worst levels. They still lost nearly ½% on the day nonetheless. This action keeps them below the recently mentioned 1700 inflection point. Again, this isn’t a line in the sand but it does provide a good point of reference since it is around the recent breakout and the May and August peaks.

Futures are getting slammed pre-market so we will likely see some follow though selling-at least on the open. This action could push the Ps below their well-watched 50-day moving average. There’s nothing magical about this average either but it is well watched and it does provide another inflection point.

The Fed rally has been totally discounted-and then some. See recent columns on news reversals.

As I often preach, even if you didn’t know one thing about technical analysis, you could look the price today and then compare it to the price a week ago, several months ago, etc. In doing this, you will see that the Ps haven’t made much forward progress in over 4 months on a net net basis.

The Quack still looks better than the Ps. Its recent breakout from around 3700 remains intact. Shorter-term though, it has lost some momentum. Speaking of 3700, keep an eye on that level. Again, it is not a line in the sand but it is certainly worth watching.

On the long side, I’m still seeing some setups in selected technology.

On the short side, I’m still seeing setups in big cap stocks that have recently hit new highs and have begun to roll over.

So what do we do? For the most part, today’s plan is a cut and paste from Friday: The plan still remains essentially the same. Continue to take things on a setup-by-setup basis. It’s not a throw a dart type of market. You have to pick your spots very carefully. On the long side, if you REALLY like a setup, then take it. Just make sure you take into consideration this morning’s weakness. Wait for entries. No trigger, no trade. That simple rule has kept us out of quite a few stinkers as of late-yet another one on Friday in fact (I’ll cover this in Thursday’s show). On the short side, keep an eye on setups in the aforementioned big cap issues. Use caution on entering around the open since the futures are so weak.

For the aggressive looking for an S&G type trade, keep an eye on the index ETF shares for a possible opening gap reversal. See my webcast archives and the articles under education on my website for more on this.

Best of luck with your trading today!

Dave