Smacking The Low
Traders who
come of age and start “making it” usually have one
transition phase in common, early in their careers. It is the pivotal time that
separates the winners from the wannabes. They go from being opinionated to
letting the market determine their course of action on a day-to-day basis. Being
able to change your outlook on a dime is the name of the game.
Today, the conditions are being met
for adopting a posture of extreme open-mindedness. You have a terrific setup of
multiple indicators that are telling you to consider the potential of a
significant low.
As of Tuesday, there were four CVR
signals with an upward bias, along with the CHADTP and Momentum Index Indicator
all issuing up signals. These signals have a shelf-life of a couple of days.
On the Nasdaq, we came within a hairsbreadth
of short-term support off the April low. On the S&P, we didn’t hit it quite
as solidly, but we at least came within range of the April lows.
We’ve also got long-term support
coming off a trendline that connects lows going back two years on the S&P
500. You can draw a similar trendline on the Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating).
We’ve got a Fibonacci time cluster
between Sept 4 – Sept 6, according to Carolyn Boroden. The price action I look
for on clusters such as these is an acceleration into the time window, coupled
with a reversal. We had that today, although as I write, the market is easing
back toward the lows. Still, the volatility in this crucial time frame
suggests that we continue to watch for possible confirmation of a low.
Finally, all of the above is taking
place against a backdrop of increasing pessimism.
When all is said and done, all of the
above is totally meaningless if the market does not show us some impressive
confirming action over the next few days.