Stock Market Indices
Contrary Thinker’s comprehensive model is showing signs that a low is nearing. The proportion of that low, be it short term or bigger swing intermediate term. At this point, before the pivot is in the size of the recovery is a moot point. It will be a trader’s entry only nothing long term; and a place to engage aggressive long-only scalping strategies, if the TE#2 or #4 set up takes place.
Regarding the long term, the risk is signaled off May 12, 2020, and remains off, our inhouse screen process for sectors will be working overtime between now and the end of the year for long-only “big swing” candidates.
In the meantime, all the indices in the States and the Nikkei all with new lows expected at the open today will complete a fifth wave down from the historical highs. While many have already based on emotion called the decline a new downtrend or looked at the 20% decline definition as a signal? That the larger trend is now down based on objective stuff and reason-based factors that tell investors the larger trend is down. And one of them is the EWT pattern of a clear five-wave decline that does not break any rules.
Today’s open will provide that. However, most markets have not yet worked off their panic background, in such a case leaving the intraday vulnerable to whipsaw action and S-T reversals, hence the off hedge for the aggressive hedge strategies on ES, NQ, and RTY. More on that later in the LI Group.
However, the Nasdaq 100 (NQ) is at a new TE #4 signal on an S-T basis. CT will consider engaging the short only scalper before the open.
CT’s overbought/oversold model on an S-T basis only has the Nikkei and the mini Russell providing signals that a low is near, as in today or the end of the week.
All the markets while tracing out the bearish five-wave patterns have held in CT’s I-T support zones, a bullish sign thus far, but we will need a reversal signal above new resistance points to generate a buy signal. The mini Russell has broken below the I-T support zone, which makes it a new resistance. A move by it back into that zone would be one signal.
Great and Many Thanks.
Jack F. Cahn, CMT
A Thinking Man’s Trader Since 1989,
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