Welcome to the Bear Market on Wall St
Technically the market is in a Bear Trend and is vulnerable, on edge and all sell signals should be considered below major resistance points.
On the Sell Side: accept all Breakout, Fade and Reversal signals.
The Market is vulnerable to the offer and any negative signal, especially below the previous session high is an opportunity.
Anticipate a price “Zone” around a major Resistance point to Fade, plan and be ready. If your stop gets hit and the Market does not immediately follow through, consider re-entering, even doubling up if there is structure to define low risk.
If the trade has good confluence with other like markets or a negative indicator signal, stay heavy. If not lighten up to original position size. This strategy should only be used at a turning point mark and within the acceptable Stop Zone. Accept only 2 losses and then consider reversing position.
On the Buy Side: Reversal L strategies can be executed off of major support marks but preferably after an emotional sell off. This is an aggressive strategy and any profits should be taken at the previous support failure marks. Expectations should be for an immediate “V” bottom turn with the Market quickly moving away from the area or a gradual rise with higher lows after an exhaustive signal.
Avoid Fade Buys even with confirmation as this is more likely a plateau for a Breakout Strategy. Buy Breakout strategies are not recommended but do have a better chance of succeeding than a Fade.
Note: This market is under duress. Any positive action is going to have issues. Look for excuses to Sell. If the Market is heading lower, it should be easy holding a Short position. If not, it is likely we are in for a sideways trendless trade than a positive turn. Be nimble. Take what the market gives.
Heffernan Capital Management
Business Development Director – Private Client Group,
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408
Fax: +65 6329 9699
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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