Dear Friends,
In my earlier Dow Outlook 081111 , I was of the opinion that the Hopes for a "Climb Back to Health" Scenario is fading, mainly because the Price movemen
ts seem to be in a Sideways Consolidation Pattern Formation mode (SCPF), and this means very difficult market trading conditions due to its continued volatility, which would take out our stop losses. As mentioned, I avoid such trading conditions for a more, well behaved market.
What about trading the S&P 500, the Nasdaq 100, or the Russell 2000?
Let's review the relevant charts. The S&P 500 looks very similar to the Dow Chart, and thus, it is possible that it is also in a similar SCPF mode. However, we would advice caution to anyone intending to enter Long Positions for the Nasdaq 100 and the Russell 2000.
Unlike the Dow and the S&P500 which have not formed Lower Pivot Lows since the Crash, the Nasdaq 100 and Russell 2000 have formed Lower Pivot Lows AND Lower Pivot Highs, and this suggest a Higher Probability that it is still in a Downtrend, amidst a Correction Wave.
We should note that both the Dow and the S&P 500 did form Slightly Lower Pivot Highs as well, but it is their Higher Pivot Lows that suggest a potential Sideways Consolidation.
CONCLUSION
The S&P 500 has the same outlook as the Dow, i.e. Short Term Sideways Consolidation, Long Term Bearish whilst Medium Term Hopes of a "Climb Back to Health" Scenario is fading.
We would trade the Nasdaq 100 and the Russell 2000 only on a Short Position Strategy, with a Stop Loss just above the latest Pivot High. If our Continued Downtrend Outlook for Nasdaq 100 and Russell 2000 is right, the Indices should not break above this Pivot High.
Lastly, please be reminded on the Liability Exclusion Clause, which is at the top of my blog page, i.e. that the final trading decision is yours, and I will not be responsible or liable for any losses you may incur from whatsoever reason. :)
Best wishes,
Ooi
© Copyright of Praesciens.blogspot.com, 2008
In my earlier Dow Outlook 081111 , I was of the opinion that the Hopes for a "Climb Back to Health" Scenario is fading, mainly because the Price movemen
ts seem to be in a Sideways Consolidation Pattern Formation mode (SCPF), and this means very difficult market trading conditions due to its continued volatility, which would take out our stop losses. As mentioned, I avoid such trading conditions for a more, well behaved market.What about trading the S&P 500, the Nasdaq 100, or the Russell 2000?
Let's review the relevant charts. The S&P 500 looks very similar to the Dow Chart, and thus, it is possible that it is also in a similar SCPF mode. However, we would advice caution to anyone intending to enter Long Positions for the Nasdaq 100 and the Russell 2000.
Unlike the Dow and the S&P500 which have not formed Lower Pivot Lows since the Crash, the Nasdaq 100 and Russell 2000 have formed Lower Pivot Lows AND Lower Pivot Highs, and this suggest a Higher Probability that it is still in a Downtrend, amidst a Correction Wave.
We should note that both the Dow and the S&P 500 did form Slightly Lower Pivot Highs as well, but it is their Higher Pivot Lows that suggest a potential Sideways Consolidation.
CONCLUSION
The S&P 500 has the same outlook as the Dow, i.e. Short Term Sideways Consolidation, Long Term Bearish whilst Medium Term Hopes of a "Climb Back to Health" Scenario is fading.
We would trade the Nasdaq 100 and the Russell 2000 only on a Short Position Strategy, with a Stop Loss just above the latest Pivot High. If our Continued Downtrend Outlook for Nasdaq 100 and Russell 2000 is right, the Indices should not break above this Pivot High.
Lastly, please be reminded on the Liability Exclusion Clause, which is at the top of my blog page, i.e. that the final trading decision is yours, and I will not be responsible or liable for any losses you may incur from whatsoever reason. :)
Best wishes,
Ooi
© Copyright of Praesciens.blogspot.com, 2008
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