The Sunny Side of the Street

Figure 1- INDU drops 307 points in 1 day

Seemingly out of nowhere the eight day run upwards terminated with a 307 point waterfall on the Dow.  In fact, three days of gains were lost in a single day.  Interestingly, from a technical standpoint, it just looks like the trendline I was talking about yesterday actually stopped the move up and the market will need to do some retracing to make the attack again.

Figure 2- Broadening formation on INDU

In yesterday's commentary I talked about the broadening formation and that the Dow had seemingly burst through the formation to the upside.  Today the market turned right around and we right back into the formation, stopping the down draft right at the bottom trendline that forms the broadening form I was talking about.

Figure 3- SPY 15-min chart showing the sell signal

On the chart in Figure 3 you can see that the opening gap was so sharp that it took 2 bars for the model to give the signal to sell.  Taking that signal, it turned out, was still a profitable move, as the remainder of the day continued to move on downward.
 

The stopping point for today's down move is right at a line of previous gaps and turning points.  For that reason, I suspect that tomorrow will be a very choppy day, but not necessarily another straight down day.  The Attractor at 8413 is likely to be the target for tomorrow's action, with a lot of bouncing around in the meantime.  The overall direction of the market is still down.  It seems like, after 8 days of positive activity, that the market wants to begin changing direction and make at attempt at escaping from the constant movement down.  The lower bound for tomorrow's activity should be no lower than 8028. which is another scary 200 points down.  I don't think we will get that low, but if we do head down it seems that level should be support.

I am going to back off for a few days, not taking any trades while I watch and learn what the market is doing during this war-time.

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