Today the futures are opening down about 20 handles. There was no terrorist attack, and no Greek Default. You would have thought there would have been a small relief bounce, but perhaps this demonstrates how weak this market really is!
It’s been about six weeks since the low was put in after the Head and Shoulders pattern triggered. Typically continuation patterns take about 6-8 weeks to form and then resolve. Market participants have been trying to maneuver this lower range, with 1-3 day trades both long and short in extreme ends of the range. Some also are buying a macro tier one in this lower area to buy the dip. At this point it seems like we will have resolution soon.
Markets will need to bounce quickly in order to take some pressure off. If we get a 30-60 minute close below 1135 this lower Bear Flag/Ascending channel could start to resolve to the downside. Support is 1120 area and then the 1101 low from early August. A daily close below these levels can get a nasty move lower quickly. Down to 1072-1077 then a major area around 1050.
The Major-Major support is in the area of 1010-1040. The low of last year. For me, I’m coming in flat as I did not like the action of late last week. It was too risk to take home longs on Friday, but also risky to take home shorts given how much we sold off. I will look to see if anything can go green today. High beta tech has tried to hold a bit higher last week. I will see if I can buy any of them and watch (NASDAQ:AAPL) as proxy and test it long at times.
I will wait for a 15-30 minute low to trade long against in the (NYSE:SPY) and (NASDAQ:QQQ)—but if it doesn’t hold, I will sell and not play the cost average game. In this area the cost average game is WAY TOO RISKY. If you came in short today, I’d cover some on the open. But if you have the risk tolerance, hold some. If you are flat and want to get short, see if they can’t bounce in the first hour or so. Short vs. the morning high and then see if the lower levels start to get taken out with volume.
See Friday’s weekly recap for more analysis as well.
Scott Redler is the Chief Strategic Officer of T3 Live. He develops all trading strategies for the service and acts as the face of T3 Live. Mr. Redler focuses on thorough preparation and discipline as a trader. Scott Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Scott moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, he maintained his status as a top trader in the industry while working closely with all traders in the firm to dramatically increase performance. Scott has participated in more than 30 triathlons and one IronMan triathlon, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business and Bloomberg, and he has been quoted in the Wall Street Journal and Investor’s Business Daily among other publications. Scott produces much of the media and content available to subscribers and followers. T3LIVE.com is an online financial media network and education platform that provides active traders and investors with market analysis, real-time access to strategies, and in-depth training from real traders, real-time.
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