I’ll be cutting out about an hour before the close today and won’t be making any more posts until later this evening. Therefore, I wanted to share some of my thoughts on the market especially in light of today’s sell-off.
As you can see from the recent string of QQQ daily charts posted on the site, the market continues to play out basically exactly as predicted over the last few months. My point here is not to boast or beat a dead horse but more so to reinforce, or highlight, that because of the fact the market has done nearly exactly what I predicted it would most likely do (starting with the bull-trap failed break-outs to new highs/wedge overthrows), this only increases the odds that this scenario will continue to play out. To be clear, that does not mean that it will or must, just that based on both the various technical and fundamental reasons that I’ve been citing for this scenario along the way that all of those events have come to fruition and therefore, we will likely see additional downside in the markets from here (fleeting counter-bounces notwithstanding).
Previously, I had stated that I had expected a reaction off T1 (first target) on the QQQ/$NDX and once that bounce/consolidation had run it’s course and prices made a solid break below T1 that the selling would likely accelerate. I also stated, and still believe, that T2 will likely offer very little, if any support on the path towards T3. That may or may not prove to be the case and so far today we actually came with about 0.15 (15 cents) of T2, hence, a likely cause for the minor bounce so far today. (note: the targets differ slightly on the daily & 4 hour charts that I’ve been posting due to the differences in candlesticks, etc.. but they do roughly coincide).
Therefore, as nothing has changed from a technical perspective and in fact, as the charts continue to play out as predicted, I will continue to align my trading plan to my primary scenario. i.e.- I will continue to maintain an aggressively short bias while targeting the higher (in number, lower in price) targets on my short trades while allow for more liberal stops. I imagine that many traders, even those who were already leaning bearish before today but were not fully positioned as such, feel like the market is “down too much” to short anything today…. that although they now have the confirmation they were looking for, they’ll just wait for the first big bounce back to the XXXX level and then load the boat short. Maybe that bounce comes, maybe not. If it does, great. If not, then what? Bottom line is this: I believe that shorting at current levels (SPX 1400 as I type) is still objective. However, I would much prefer to see the market close below that level today to keep the bearish scenario intact. Any close significantly above SPX 1403 or NDX 2636 might call that scenario into question.
Trading isn’t easy. Bull markets tend to leave willing and wanting buyers behind by not allowing many “no-brainer” entries and bear markets, even corrections, do the same to willing & eager bears who saw the move coming but didn’t have the gumption to short when the charts told them to but the bullish sentiment near the highs or maybe a few ‘early” losing short trades made them second guess their analysis.
I have nothing to gain in sharing these thoughts (other than profits on my trades) and a whole lot of crow to eat (and embedded profits to lose) if wrong but I strive to share my thoughts and trades in an actionable & timely manner as I make every attempt to avoid after-the-fact hindsight analysis and trading calls, which are all too common in the mainstream media. I just wanted to try to share my thought process on where we are, where we might be going, and how to trade accordingly. I plan to comb thru the charts in detail when I return later this evening & post anything of interest. I will also continue to update the trade ideas. I noticed several old long trades still listed active that were stopped out and should have been removed. I will also try to add a few new trade ideas later today or tomorrow as well.
