Hi Everyone
More sloppy action in the markets yesterday – 3 of the last 4 bars in the S&P and Nasdaq have been doji-like with wide ranges and the open and the close near to each other.
This signifies indecision and no clear direction in the very short term for the major indices. That can always change pretty quickly, but we could really do with some nice tight price bars in order to set up a clear pattern. The financial stocks are licking their wounds right now but they too need to calm down in order to form a nice tradable pattern for us.
The OVI is still stubbornly negative for the Nasdaq (see below), marginally negative still for the S&P, and almost neutral for the Dow. There area number of decent looking bear flags and not much in the way of bull flags right now. Most of the good looking bear flags are on the back of big falls post earnings, so we may need some more sideways action before another decent drop.
Remember, if you’re going to have a go, make sure it’s on a breakout – that may involve you placing a stop limit order, or contingent order based on the price breaking through support (in the case of a bear flag breakout).
For more details about the OVI go to http://ptc.flagtrader.com.
All the best
Guy
