Today, the markets gapped down and dropped 7%, and it only took 7 minutes for the market to make a rebound to fill the opening gap. This was the largest morning gap down I’ve ever seen in a
S&P 500 – 1 Day
S&P 500 – 3 Day
The next three 6-month charts show several important technical aspects of today’s action. With the exception of the NASDAQ (the best performer), both the DJIA and SPX formed doji on massive volume. The doji are long-legged, signifying extreme indecision (confirmed by the 1,000 point range in the DJIA). Notice how volume it “back to normal” levels. We actually hit record volume today on the NASDAQ and SPX.
Next, notice the Bollinger bands. With the exception of the NASDAQ, today was the only day where a day gapped down so far that it opened below the lower band. Not only that, the day closed completely below the lower band as well.
Given the band width’s extremes, the massive record-setting volume, and the long-legged doji, I believe we are where we need to be to cal la bottom. I have started entering longs today. Since a bottom is tricky, it’s smart to gradually scale in positions instead of shooting your whole wad in the market all at once.
Below, the VIX set more records today by hitting a high of 76.94! Incredibly, this is the highest reading since the inception of the indicator, a testament to the true extent of our problems. As the market rallied, the VIX came off its highs and closed at 69.95. Although the day’s pattern is not considered a long-legged doji, the candle is a high-wave stick signifying major confusion. A single pattern isn’t as reliable for predicting a reversal, but 2 or more increase the odds. What I am looking for on Monday in the VIX:
1) The present pattern may be enough to start a reversal, but the signal is not clear
2) Bearish gap up, fade throughout the day to close well below it’s open
3) Doji, preferably long-legged
4) Bearish engulfing
The last three patterns put the odds of a major reversal close to 100%.
VIX – 1 Day
2 comments:
Yesterday aapl one of the easiest stocks to trade ! take care
Yesterday aapl one of the easiest stocks to trade ! take care
Post a Comment