After a respectable up day on Tuesday, it was all red the rest of the week. That’s become a common
theme, as this marks the 5th weekly loss in a row. Additionally, this week’s 1.5-2.3% drubbing
represents the biggest weekly loss of the calendar year, and the largest weekly decline that has occurred
since August of 2010. That might not be saying as much as it should since the indices have enjoyed a
near uninterrupted advance over the prior 10 months, but there’s no doubt that this sucker is picking
up speed.
This week’s action represents big progress on many fronts, and no matter how you look at things, we
know that the true nature of the decline necessarily has to be exposed in the coming market hours.
That’s because this week’s action started a process that simply must be resolved, one way or the other.
From where we stand tonight, we have to favor further weakness ahead. The only respectable labeling
of this pattern points lower, and recent action indicates that it should happen directly from here.
That’s why we’re doing what we’re going to do tonight. With strong downside potential and relatively
tight risk, we’re going to recommend a short near-term position, but only to aggressive traders. The
move is aggressive because we’re still not hugely confident in the pattern, and since price has been
pretty darn volatile on a day-to-day basis. If you don’t like it, there’s no harm in not taking it and
other, better opportunities will be available soon. But at the current moment, this is the only play
available.
theme, as this marks the 5th weekly loss in a row. Additionally, this week’s 1.5-2.3% drubbing
represents the biggest weekly loss of the calendar year, and the largest weekly decline that has occurred
since August of 2010. That might not be saying as much as it should since the indices have enjoyed a
near uninterrupted advance over the prior 10 months, but there’s no doubt that this sucker is picking
up speed.
This week’s action represents big progress on many fronts, and no matter how you look at things, we
know that the true nature of the decline necessarily has to be exposed in the coming market hours.
That’s because this week’s action started a process that simply must be resolved, one way or the other.
From where we stand tonight, we have to favor further weakness ahead. The only respectable labeling
of this pattern points lower, and recent action indicates that it should happen directly from here.
That’s why we’re doing what we’re going to do tonight. With strong downside potential and relatively
tight risk, we’re going to recommend a short near-term position, but only to aggressive traders. The
move is aggressive because we’re still not hugely confident in the pattern, and since price has been
pretty darn volatile on a day-to-day basis. If you don’t like it, there’s no harm in not taking it and
other, better opportunities will be available soon. But at the current moment, this is the only play
available.
