Our market timing signals have displayed the caution indicator for 7 of the last 8 trading days prior to today.  If you follow our timing signals you would have sidestepped today’s value loss of almost 3%.

During these cautious days we have suggested taking profits and tightening stops in preparation for a sharp down day like we experienced today.  So if you are an active trader and have not significantly reduced your exposure to this market then your portfolio may be at more risk in the days ahead.

As always, let’s review the stock charts to understand our technical analysis and the probability of the next move in this market.

Looking at the weekly stock chart you can see that today’s action moved stock prices below the PSAR.  However, only 4/5’s of this weeks trading has taken place so far. 

So if stock prices go up tomorrow, the weekly PSAR posture may remain in the bullish mode – but based on today’s action it’s likely to switch to bearish on the weekly time frame.  If that occurs a caution signal would be in place on the weekly trend.

On the daily stock chart prices are solidly in a bearish position which has turned the caution indicator to “down” on our market timing signal chart.  The PSAR remains bearish and today’s price drop has pushed the confirming indicator, the CCI20, below the zero line and into bearish territory. 

However, stock prices are now even with the lower trend line of the up trending channel.  This price level also coincides with a recent high and consolidation area at approximately 10,500.  Whether this combination of price levels can provide enough support to reverse the daily trend back up to bullish remains to be seen. 

Stock prices could consolidate at this level of support – and this might be the most likely action for the next few trading days.  It would then remain to be seen if more prices drops or a low which would move stock prices higher again on the daily time frame would be expected.

On the hourly stock chart, prices plummeted all day, only stopping to pause around the middle of the day.  Today’s move down has created a new low that is parallel with the upper trend line and appears to be creating a channel down.

Suggested trading strategies based on the current technical analysis and market timing signals:

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