I started the day with this note to my chat groups:
Yesterday's price action was quite bearish. I was expecting some weakness after a 2-3 day very strong rally but the decline was way more than I had expected. A lot of damage has been done by yesterday's crash. The index has support at 4375, then at 4340. If we lose that 4340 level then things could get ugly. The March daily low of 4180 becomes a viable target. The most bullish thing that could happen today would be for the market to open lower, test the 4375 level as support and then reverse and press higher towards 4415. That's a lot to ask for. But, if it happens then we'll be back in "rally mode." Otherwise, the possibility of heading into the weekend on a weak note is going to make a lot of traders nervous. Fortunately I have locked in most of the gains from the nice rally of the past few days. I haven't lost my faith for a bullish April yet but will be very cautious now to decide which direction I'm willing to bet on for the next few days.
Yesterday's price action was quite bearish. I was expecting some weakness after a 2-3 day very strong rally but the decline was way more than I had expected. A lot of damage has been done by yesterday's crash. The index has support at 4375, then at 4340. If we lose that 4340 level then things could get ugly. The March daily low of 4180 becomes a viable target. The most bullish thing that could happen today would be for the market to open lower, test the 4375 level as support and then reverse and press higher towards 4415. That's a lot to ask for. But, if it happens then we'll be back in "rally mode." Otherwise, the possibility of heading into the weekend on a weak note is going to make a lot of traders nervous. Fortunately I have locked in most of the gains from the nice rally of the past few days. I haven't lost my faith for a bullish April yet but will be very cautious now to decide which direction I'm willing to bet on for the next few days.
Well, it was another brutal session today with S&P crashing down over 100 points, closing below 4300. Given the severity of the decline and damage done to the chart, there is a high chance that we will see a retest of the March low around 4180. The question is how soon this may occur. However as of now, the stocks are so oversold, it can hardly expect any immediate major decline from here. I'd think the market is poised for a rally first, so-called dead cat bounce for early next week. However, any rally attempt is doomed to be short-lived and will be followed by another leg down, which is likely another severe selloff to test the March low. That's how I have advised my Family to trade. By using a special option strategy (calendar calls), we can bet on this dynamic movement of the market with very limited downside risk. The potential gain could be big. Given the huge uncertainty at the moment and swift changes of directions, it is prudent to trade with low risk high return strategies.
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