Will The Pullback Continue?
On Friday I mentioned the extreme complacency in the market and we know that historically when this occurs, markets tend to sell-off on a short-term basis.
Friday’s sell-off looked exactly like August’s sell-off with high paying dividend stocks and emerging market ETFs showing outsized losses. The next few days will be important because if the pullback continues with these stocks leading the way down, it will reflect a rotational shift from the three week rally of September.
The market is now oversold and we’ll look to begin scaling-in.
Today’s Potential Opportunities on Further Pullbacks:
Stocks
ETFs
The metals but be very careful.
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The Significance of Closing Prices to Their Daily Bar Range
About a decade ago we quantified the significance of where a stock closes in its daily range and the short-term impact of that close. What we found was that oversold stocks that closed in the bottom of their range tended to be have greater short-term edges than stocks that did not.
The following is a recent study done by Quantitative Systematic Market Analysis, a very well written blog. The study was done on ETFs and is consistent with the studies we’ve shown in stocks. Also, look through his blog because he has topics which will likely be of interest to you.
https://qusma.com/2013/09/11/
The above excerpt is from Larry Connors’ Daily Battle Plan – A professional-grade trading information service that will help you understand the quantitative metrics behind each day’s market conditions and how they point to selective strategies for high-probability trades.
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