It was a horrible day no matter how you slice and dice it. Without bullish divergence between price and the RSI, Wednesday afternoon's bounce associated with the buy setup on the hourly chart led nowhere. This morning we find ourselves waiting for another sequential or countdown completion on that time frame; both counts being on bar #7.
Thursday's price action sliced through the risk level (shown on the chart by the horizontal dashed cyan line at 1242.03) associated with the sequential buy signal on the daily chart. This time the break was qualified. Perhaps the bulls also need to wait for another buy setup to develop on this time frame. Waiting a bit is also counseled by the indicators I follow. As an example, the RSI (top pane) is now at it's lowest level since October 2008. Notice this is well prior to the ultimate 2009 low. The point is that extreme indicator readings most often indicate that when the market finally finds its footing it will come back and test the low after a rally or consolidation.
Bottom Line: The allocation mix meter is at +25%. Waiting for the dust to clear.
1 comment:
Great post. Hope to see (and learn from) more takes of yours. I am sure you have $GLD in your back pocket (-:
Thanks much and have a wonderful weekend!
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