On Monday, I did a lengthy premium post stating what marvelously uniform the wedge patterns in the indexes were, and how powerful a position the bears might be in (“I’ve never seen such gorgeous unanimity among such a wide variety of stock indexes“). On Tuesday, the market fell hard, agreeing with that assessment.
Today, of course, the market rallied mightily, but even in the face of such dire adversity, I did another premium post which pointed out that all that buying had merely pushed prices back to perfect points of resistance. As I stand here on Wednesday evening, that continues to be true, with a pixel-perfect tag of the trendline executed by the /RTY.
Take note of how what used to be support (green arrows) transformed (blue oval) into resistance (red arrow).
The dream scenario, as highlighted by the updated index charts below, would be for Thursday’s price to not meet or exceed the price gaps that were established by Monday’s lows. Stay below this level – – ideally, weaken away from it – – and then bears start to get the upper paw.
For myself, I’d give Tuesday a grade of “A” and today a grade of “C-“. I dialed back positions from 27 to 20. I had a very good result with AXON, but that couldn’t make up for the damage to my other shorts, thus, I gave back a portion of the prior day’s gains.
I have trimmed exposure from 150% to 133%. A tremendous salve for my own positions would be a scenario like the one I’ve just described. We shall soon see!
