Why I still expect another leg down
In the last week very little has changed with regards to my
market outlook. I see no buying excitement and little stimulus for the market to
begin a strong move up. I remain bearish and believe there will be another leg
down before the next true Bull Run begins.
That said, the move down last week did cause a fair number of individual names
to become overly extended to the downside. One of the more reliable proprietary
indicators that my firm uses is suggesting a bounce is likely in the next few
days. Today’s attempt came up lame, but I’d still like to see a 2-3 day move up
before I would get overly aggressive taking on any new short positions.
In doing my research this weekend, I found more potential buy candidates than I
had in recent weeks. The choppy action of the market over the last several weeks
has given individual stocks time to do some base building. Most of the potential
intermediate-term opportunities remain in sectors like Oil & Gas, Chemicals, and
Metals. These are not ideal sectors to lead a new charge higher, but could
provide some worthwhile trades.
Cash and patience remain most traders’ best assets at the moment. Preserve your
capital and focus on opportunities with high risk/reward scenarios. If they’re
not readily available, watch and be ready to pounce when they are.
Best of luck with your trading,
Rob
For those who may be looking to expand their
knowledge beyond just market timing, my
Hanna ETF Money Flow System utilizes the VIX in generating trading
signals for spread trades.
Rob Hanna is the principal of a money
management firm located in Massachusetts. He has spent the last several years
developing and refining methods for trading in stocks across multiple time
frames. He selects stocks using both fundamental and technical criteria, and
then trades them using technical analysis techniques.