If there was any doubt the market had entered into a bigger correction in the past few weeks it was made clear today. The market basically plummeted once key support was lost as many traders had been focusing on it and now it looks like the next stop might be the 200 Day Moving Average. If the market does a Zig Zag where C=A, then we're looking at 1718 as the ideal target area but given the fact the 200 DMA is at 1707 and rising, I would say there is a good chance buyers won't step in until that trendline is tested. What happens from there is obviously too early to tell but going by my Long Term count from last year (I am posting the version originally posted on May 2013), a double ZZ would be perfect in correcting the market and creating enough of a base for a rally to SP2000. The area I like for this correction to end would be in the 1575-1640 level, with the latter being my stronger preference given several support layers in that zone. But before we get ahead of ourselves, we have to see how the 200 DMA holds as we can only plan for lower levels once the 200 DMA is lost.
Unfortunately I couldn't get out of my XIV position on a bounce but I got out as soon as support was lost, so now I'm 14/16 for the year and still ahead but not as much as I was a few days ago. I was really hoping for the market to test upper resistance to short but that doesn't look too probable right now. So I will consider trading the bounce only if we see the 200 DMA or short on Trend Average test, until then I am just going to be an spectator.
Short Term Trend = Bearish
Medium Term Trend = Bearish
Long Term Trend = Bullish
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