The markets are extremely stressed out as anyone can see from the above charts. Be aware of the potential for manipulation, especially in small caps. It's definitely not an ideal time to be taking on new swing positions, but if you must, sizing reductions will help the pain on stop outs due to high volatility. Volatility readings, which measure fear and uncertainty, soared to new multi-year highs this week.The first chart is the weekly timeframe for the NASDAQ and as you can see we've added 34 pts. or 1.3% on the week, and in so doing, we've come back up to the cusp of the accelerated trend line. Still extreme volume levels, wide upper shadows on the candlesticks, and the bearish MACD crossover imply further weakness to come. The oversold posture was worked off midweek and is still holding the neutral zone.
The only optimistic scenario at this point, would be a retest of the broken trendline on the daily timeframe. The door is still open to that possibility if we can hold a higher low on the retest of the 200 DMA as we did on Friday. New subprime worries will hold sway until the marketplace gets a handle on the extent of the problem so I'm taking it one day at a time and keeping my eye on the 15 minute timeframe intraday to guide my trading decisions.
No comments:
Post a Comment