Monday,
The markets finally broke down in my opinion… can they bounce tomorrow? Possible, but the upside would still be limited and today’s activity shows there is no buying interest in the market sell off at this point, so I would continue to look for more selling to be the order of the week.
The DJIA lost more than 200 points today, but closed down only 180 points for the day… after a major sell off and on such low volume it is not unheard of to see a bounce attempt the following day, but the chart shows we have now closed below the uptrend line, which had already been pierced three separate times before today, and with the overall up trend activity since July the 15th looking like a bear flag or a bull trap, I would not look for the market to do anything but sell off here and I definitely would not recommend buying this little pullback today… In fact I would look for the blood bath to get worse before it gets better.
The NASDAQ lost 35 points today, but being top heavy and forming a clear continuation signal on the chart today, I would look for the selling to increase this week. The slow stochastic indicator is clearly overbought at 85 and the MACD lines are quickly converging in what will be a bearish crossover in the near future. In short, if you are long, you had better be taking those profits off the table, as we said last week, and if you really want to make money in this market you need to be short.
Today’s MPT (Market Power Trend) Rating, which tells us what “Smart Money” is doing in the market and where support/resistance is came in at (03); this tells past supports signaled last week have broken down, and “Smart Money” is not buying this pullback here. The smart trade is to be short.
As Always; Be Smart, Be Patient, & You Will Be Successful.