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On a long
term basis:
1. The market is still
within the down trending channel that we have been talking about
2. All moving averages
are still pointing down.
3. Watch for failure of
the 1475 level as confirmation of the down trend continuing.
On a shorter
term basis:
1. These have been some
choppy last three weeks.
2. The market gapped up
on Friday, but failed to continue up.
3. A gap up and a
failure is a reversal bar, sign of weakness
The market
hasn't moved in three weeks. This could be due to the geopolitical situation
or, more likely, just due to the stage in the trend.
The market
never moves straight up or straight down, it always moves in waves. It makes
a quick move, goes into a profit taking stage, consolidates, gets ready for
the next move and then another quick move. If you look at the daily chart, we
are doing just that.
We have been
in a down trending channel since the beginning of May and we have not broken
above or below it. The tendency of the market, once in a channel, is to stay
in it. The market can either stay inside the channel, breakout of the channel
and reverse trends or get into a parallel channel in the same direction.
Our bias is
always going to be with the market. In other words, no bias at all. If the
market is in a down trend, we will flow with it. We are seeing quite a few
very serious stocks, like X, PFE, Oils and more, in serious down trends or
getting ready to start a down trend. When market leaders, blue chips, start
going down or continue going down, the indexes will follow.
We are going
to wait and see the reaction to Friday's action. If the market breaks the
1475 level , it would mean that it chose the down side and we will trade with
it. Re-entry of shorts or increasing the size of your trades on the short
side is suggested.
Hope this helps,
Shay Horowitz - ShogunTrading
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