Market

[Pascal]

Market is rather negative today.
I was planning to short strength today, but we only got weakness and already an oversold situation.

The S&P500 is already below its 50MA and we might fall down to the support level of 1925 before a possible bounce.


Pascal

25249

[Riskslayer]

Hi Pascal,

I have been light in my trading due to the 20d MF sell signal and other stuff I look at.

I closed out a few longs I had earlier today to have a clear head this afternoon.

What would be your keys for finding a reversal in this market?

I assume LEV spiking, but does the cumulative ticks need to go positive?

Also, market does not look very oversold here on your OB/OS chart.. I guess that metric is saying there is plenty of downside in this market left.

Thanks,

Shawn

[Pascal]

Hi Pascal,

I have been light in my trading due to the 20d MF sell signal and other stuff I look at.

I closed out a few longs I had earlier today to have a clear head this afternoon.

What would be your keys for finding a reversal in this market?

I assume LEV spiking, but does the cumulative ticks need to go positive?

Also, market does not look very oversold here on your OB/OS chart.. I guess that metric is saying there is plenty of downside in this market left.

Thanks,

Shawn

Good questions!!

In a down market like that, it is not good to open new short positions, because bounces can be very swift.
As you wrote it, we are still far from an oversold situation where you know that strong opportunities will arise. However, we did not have an oversold buy signal since late 2012. If we reach the oversold level of the OB/OS, that will tell us that the market has really changed and that everything was about QE.

I am now looking at some long opportunities. For example, AMD is up more than 3% in a down market.
AMD missed its earnings some weeks ago and felt hard, but this tells us that the downside is limited for AMD. I have a buy order at 3.90. Not sure it will pull-back to that level.

Refiners are also doing well in an weak oil market.

As of now, the market seems to have found a low volume bottom during the lunch break. Not sure that this will hold though.

I am still waiting for opportunities here. If the bounce fails this afternoon, we will be opening down again tomorrow.
I would be more for buying weakness tomorrow.


Pascal