Waiting for Confirmation
Mood:  not sure
Today continue to focus on our open short positions. The market appears to be consolidating losses as it works off its near term oversold condition. Until the downtrend breaks it should be assumed that it is still in effect. Serial bottom pickers will get the bottom right eventually, but it doesn’t count if they get it on their third or fourth try since a lot of money is wasted on the wrong calls. We don’t know if the market put in a low that will hold on Wednesday, but it seems likely to us that that low will at least be tested once more before we get a significant turn around. On Friday the market showed some strength into the close, indicating that we may yet see another day of failed follow through – this time to the down side. Selling pressures over the intermediate term are still strong though and we are looking for another leg down before all is clear on the long side. Determining the big market picture is subjective and the interpretation largely depends on what you are focused on. What is less subjective is the types of set ups that show up in our scans. We scanned heavily over the weekend and couldn’t find one decent long set up from the 250 charts that we pulled up from our scan criteria. We did find plenty of short positions in fact. Even so, we expect to see at least another day or two of strength as oversold conditions are worked off. Thursday’s bounce let off a lot of steam, but not all of it. So again, today it is best not to get aggressive but instead wait on the sideline or in open trades for better positioning.