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Trading Any Market

Never Give Up Your Short Position in a Stocks Bear Market....

Stock-Markets / Stock Markets 2018 Feb 10, 2018 - 03:48 AM GMT

By: Anthony_Cherniawski

Stock-Markets

This morning’s action in the SPX was both fascinating and informative. I had suggested a bounce that might go to the Cycle Bottom resistance at 2627.12. It didn’t even make it. Wave [a] went to 2619.47, then reversed down to make a new low at 2563.49 in Wave [b]. Wave [c] was stopped close to the neckline, which I had also mentioned as another resistance point. In my opinion, that validates the Head & Shoulders formation as is. This is called an irregular correction, but since Wave [c] is barely visible, it may be referred to as a “running correction.”


This afternoon the panic decline may begin unless massive intervention is brought in. However, the Fed is playing down any intervention…so far.

VIX hasn’t moved out of its trading range thus far. However, as the SPX declines into the weekend we should see more buying of puts to protect portfolios over the weekend. This may lead to an outright panic starting this afternoon as it sets up a negative feedback loop for stocks.

VIX ETFs are trading near their highs…

The NYSE Hi-Lo just broke beneath its Cycle Bottom support at -129.45, confirming the decline is resuming in full force. This indicator is giving us reassurance that the internals are giving way, even while the market attempts to rally.

This morning I suggested that we would know the direction of the market by noon. That appears to be the case.

You will notice that I am not suggesting any trades within this decline, yet. There is good reason. First, it has been impossible to time the retracements. Second, the Fibonacci levels may not apply. I know some traders who are still waiting for an expected 61.8 Fibonacci retracement of Wave (1). He still may not be short as I write.

Jesse Livermore once said, “Never let go of your (short) position in a bear market.”

Good luck and good trading.

Never give up your short position in a bear market....

Regards,

Tony

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Anthony M. Cherniawski, President and CIO http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals.

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski Archive

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