Stock Market Analysis

Friday, August 18, 2017

US Market Returns To Intermediate Correction...

In one fell sweep, the market reversed back on track for the intermediate correction I talked about so much over the past two weeks again. Good thing my Master's Stock Options Picks subscribers and I  only took very small positions in call options on QQQ over the last two days partly because I was anticipating the possibility of such a move and didn't want to make the usual commitment.

The Dow made is biggest single day fall since May, dropping 274 points, taking out all of the small gains over the past few days and restested the 30MA all at once. Indeed, as I have said before last week, the intermediate correction is going to retest the 30MA and then go largely sideways with a bit of bearish inclination just like what it did back in March. This is because there isn't anything in the fundamentals that warrant an all out market crash yet and such intermediate corrections are very common especially around critical psychological levels like the 22K level and the 21K level etc. The Dow also took months of sideways bearish inclined movement before it mustered enough strength for a real 21K break out in April.

Supporting that outlook is also how the Dow made a volume spike yesterday. Such volume spikes almost always suggest an overdoing and a short term reversal. The lack of any real disappointment in the economic numbers also suggests that this drop is an overdone one. As such, I will be switching back to the intermediate correction trading plan I talked about last week, seeking long and call entry opportunities around this level and also layer strategically into my existing QQQ call options.

For now, the market turns a short term bear trend within an intermediate neutral and primary bull trend.

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