Here’s How I’m Playing Any Bounce
welcome Tim Ord to TradingMarkets. Here’s his first article.
What to expect now:
It appears a bearish “Upthrust”
was performed between Sept. 2 and Sept. 24. This pattern suggests if a market
cannot hold the previous highs (June 6 high), it will try and take out the
previous low, which is the August 5 low near 960 level. However, before that
happens, a minor bounce may appear to test the breakdown area near the 1015
level. We will look for a “Sell signal” setup near the 1015 level with a
downside target near the 960 level. The McClellan Summation index is now
trending down and implies the trend has turned down. Today the S&P did manage
to close above yesterday’s low and there is a positive short-term divergence in
the McClellan Oscillator. Also the ARMS index closed at 1.90 with the CBOE
put/call ratio closing over .95 and in the past this condition has produce a
short term bounce in the market. The trend is down. We will look for a short
term bounce to get short the S&P.
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Nasdaq
Composite:
The McClellan Summation index on the Nasdaq
is now trending down and implies the trend is down. There still is a possibility
the Nasdaq has drawn a “Three Drives To A Top” pattern. All three Tops have had
“Double Tops”. The first double top came on June 6 & 19, the second double top
came on July 9 & 14, and the third double top came on September 8 and 19.
“Three Drives To A Top” pattern predicts the market will go down to where the
pattern began, which is near the 1600 level. It is worth noting that the
Sept. 25 day broke below the previous swing low of Sept. 10 on increased
volume and that implies there is more force to the downside and a bearish sign.
Because of the over sold condition on the Nasdaq short term, a bounce is
likely. We will be looking to short the bounce.
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