Some drizzle, no rain
Posted by Danny on October 17, 2016
Since the warning signs we posted a few weeks ago we have seen a significant dip in US stocks, which suggests the market has chosen down as its next direction, at least for now. This is giving us a bit more clarity, but not much because the market is still holding up pretty well and has not dropped to levels from which a quick comeback would be difficult. Here is the current Nasdaq chart:
All three my indicators are pointing down, which definitely keeps the door open for a deeper drop. But all three are in bottom territory, so a tradeable low may come sooner rather than later. A new lunar green period will start later this week, but our LT wave for October indicates it will be bumpy.
There is no easy trade at this point. The current drizzle could give way for a clear sky, or for much harder rain.. I would still stay patient and wait for a better setup to enter new longs, for example when Earl and MoM indicator turn back up. Keep an eye on my daily reversal levels for possible buy signals in the coming week(s).