Hi Everyone
Well, as I wrote before yesterday’s action, and as I discussed in my Private Traders Club Members webinar, this is a bearish market, and Tuesday’s breakdown was no surprise except insofar as how quickly it happened. One more consolidation day would have been ideal but hey, we knew that the next move was more likely to be down than up, and so we had the means to be positioned correctly to make money.
Let’s just recap the last few days:
Last week ended with the three main indices exhibiting Dojis that gave a potential short term reversal signal. This never materialized into any trading signal, and instead the markets consolidated another day before capitulating on Tuesday.
No surprises here … OVI remains negative and the breakout happened perfectly.
S&P Weekly Chart:
Also, see the bear flag pattern on the weekly chart:
Nasdaq (QQQQ) OVI Chart (Tuesday):
The OVI has been negative since late April. With a negative OVI and a bearish pattern you simply cannot be entering bullish trades.
GS Chart (Tuesday):
GS is now in a sideways channel and its OVI is only just negative. Keep your eyes on this one and look at the breakout zones on the chart. As the price approaches those turquoise lines the OVI should give us a clue as to the likelihood of a decent breakout.
GS Weekly Chart:
Looking weak on the weekly chart.
Summary:
The indices still look in trouble and as I’ve said before, I don’t believe we’ve seen this years lows yet.
More next week.
All the best
Guy
To learn more and have access to the OVI visit my Private Traders Club area.