Intermediate-Term Correction Has Begun

Use whatever reason you believe was the catalyst for yesterday’s sell-down…Here’s a statement that bundles “all” the reasons”..haha…“Fed policy jitters, sanctions on Russia, Argentina’s default, deflation worries in Europe and a batch of weak earnings sent the Dow and S&P plunging to finish their first monthly drop since January!”

Guys..Let’s be straight…Reasons are like opinions…everyone has one and are usually different based upon what narrative the individual wants to convey…and usually it’s total BS..(no that does not mean Bachelor of Science). What matters most and will never lie to you is PRICE & VOLUME…plain and simple…Is price moving higher on increasing (supporting) volume or is it declining? An eighth-grader can answer that question…It’s on the SAT’s! Using our OODA Loop in our Daily Trade Strategy and Pre-Market Briefings, we opined what we referred to was “cracks in the bulls armor plating” well before yesterday’s sell-down, as we cautioned the long side trade and have been favoring short opportunities. Lastly, the Fed’s easy money policy basically created artificial demand creating what is known as “the bus is full”. Everyone long and only one way to go when they want off the bus…DOWN!

Overnight trade continued the price weakness seen in prior session pushing down to Cycle Day 3 (CD3) Range target of 1909.50…Current low 1910.50. Employment Numbers are due out at 8:30 am ET, so that could a “wildcard” for trade today

Today’s Hypotheses:

Scenario 1: IF the ONL (1910.50) holds, THEN there is an 82% chance of a rally greater than 10 handles which would at minimum target 1920.50, which is current Volume Trend Midpoint (VTMP)…IF this level can convert, THEN upside projects back to 1924 – 28 zone.

Scenario 2: IF sellers continue to be aggressive without a buy response off the current ONL, THEN expanded downside targets 1900 – 02 zone , followed by 1895 Xtreme.

Trade Strategy: Momentum continues down early…We’ll be watching for some early stabilization from which to nibble long side if current low (1910.50) holds…We’ll need to be extra nimble today as end of week position squaring ahead of Geo-Political tinderbox could continue to affect investors / traders aversion to new risk positions.

Stay Disciplined…ALWAYS USE STOPS!

Good Trading…David

Habitude Eleven
I am courageous and I always act, even in the face of uncertainty and possible loss. Do not say, no fear. Feel the fear and act anyway. I may be frightened, but I still saddle up. I am not reckless. I act promptly in accordance with my methodology. I respect my calculations. I have a healthy respect and I balance that respect with my courage. I am an explorer. I am on a hero’s journey.



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