By: Scott Redler of T3Live
I first started talking about the Head and Shoulders Pattern in the S&P last week, and followed up on Tuesday with a chart showing the neckline of the pattern getting tested.
The neckline was the 1255-1285 area. The measured move of the pattern is down to 1180-1160.
So far, this down move has happened quickly (quicker than I envisioned), as the market has closed down 8 out of the last 9 days in the market. I outlined a minor support area of 1220, which was tested late morning, as it tailed into this level and put in a low around 1216.
This is probably a decent spot to cover some shorts (if you took advantage of this bearish pattern) as we have seen a 90 handle down move from Monday’s high to today’s low. No need to wait for the absolute bottom.
For the active trader, use this morning’s low as the new short term pivot to trade against, but macro longs should wait for more clarity in the market.
High beta tech feels heavy and banks are super weak. Oil and OIH are getting crushed. I don’t see anything compelling that can reverse us like we did yesterday. Maybe some people squaring positions in front of tomorrow’s jobs number.
If you came in long with some trailers from yesterday’s reversal, hopefully you salvaged some of the trade and took the loss. When you step on a landmine, you always have a bit of time to run and maybe only lose a limb. If you stand on it like a deer in headlights and get stubborn, you can blow up with the crowd!
Here is a link to the blogged strategy on CNBC
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I can’t believe Bank of NY wants to charge to save money or have cash in the bank. The main reason why we went into crisis a few years back is because America–as a country and as individuals–lived beyond its means.
The Baby Boomers used their houses as ATMs. People bought houses with interest only loans, buying $500,000+ houses when they make $30,000. Individuals used credit cards as banks accounts and had no savings.
There are about 50 other reasons as well that I won’t get into today. Now, people want to be safe and save for a rainy day, the opposite of our government, and now they might be charged for it.
Cash is always king during market corrections. Read Investor’s Business Daily, they said go to Cash Last Thursday.
