Hi Everyone
A nice 5-day swing on the major averages and many leading stocks but on progressively shrinking volume. The Nasdaq (and GS) OVIs are positive as well, but I’m still of the mind that more lows are to come.
Besides, in order to trade successfully we need to have a breakout from support or resistance. And right now we need to consolidate for a couple of days so we can identify an easily-definable area of support and resistance on the major indices.
GS OVI Chart:
GS has a reasonably clear area of resistance at just over $141 (and another around $146.40). This is not to say it will break out to the upside at all, but in any case it would have to clear $141 for a bullish trade to trigger, and I’d use under $146 as a first profit target.
There are a number of decent looking bear flags out there right now and that’s still where my energies will be focused for now. Fibonacci enthusiasts will be pointing out that we had 8 days down and 5 days up, which means we’re likely to come back down today. For me that’s all very nice, but more importantly the volume hasn’t been supportive over the last 5 days. Also, considering the S&P has risen by 67 points during that time, I’d have expected the OVI to get into positive territory.
The QQQQ (Nasdaq ETF) OVI is in positive territory … but we need to have a properly formed breakout area. Let’s see what happens in the next couple of days.
All the best
Guy
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