| Chart | Score |
| 40 DMA % Index | -6 |
| 10 Day High – Low | -6 |
| 52 Week New Highs | -2 |
| Total | -12 |
We have our first sign of some regaining strength in the 52 week new high data moving from -6 to -2, but as you know a journey begins with a few small steps. Overall the charts remain very weak and the surprise price action really didn’t change that too much. Today’s end of the day charts for Monday’s trading will have a slight bullish bias if we show some recovery bounce today but after that the charts will quickly flush out the data from yesterday.
We will let the "experts" straighten out yesterday’s price data but let me quickly put in my opinion. It was real and it counts. Regardless of the reason it is an outcome that must always be taken into account. It happened. My opinion is that when we reached 5% down the algorithm trading systems just took over and got themselves into a feeding frenzy. PG was clearly a victim of the fall but a quick look clearly shows the futures sold off hard free-falling before PG began its free fall. Your trading plan must take into account such events.
So how do we trade from here? We need to see the whites of their eyes in here as the psychology of the market participants have been clearly shaken and it will take a few days to have the confidence restored or fears confirmed. I will watch the charts and gauge. I have pulled back the chart from the highs now and tightened our trading range to begin marking our way out of the hole we have dug or to watch for a fall to lower levels. We should open around that 1128 area we closed on Thursday.
First line of defense here for the bulls is 1125 below that 1112 the low of March was 1086 which might just be the ultimate goal here. On the upside the bulls need to clear 1141 then 1148 and 1153 climbing their way back up. I expect the volatility of the this week will continue as the market sorts itself out. Trade accordingly with caution.
Bulls Plan: Begin the climb back up and restore confidence. A close above 1150 would be a nice accomplishment.
Bears Plan: Run with the weakness and prove that spike down is a target. Fail any rally,defend 1140 and close today below 1125.
Safe trading – stops, smaller sizes..
