Once again yesterdays trading strategy suggestion would have kept your portfolio safe from today’s downturn. 

Even though the weekly chart is still technically bullish, a general weakening of upward price momentum may be the start of a deeper consolidation or reaction at the current level. 

This is the type of situation is similar to a traffic light that may be showing it’s ok to cross the road, but you can see a truck coming.  The best approach is to wait and see what the truck is going to do before making a commitment.

Let’s take a look at the charts for a deeper technical analysis.

As mentioned above the weekly chart is still in a bullish mode.  The CCI(20) is certainly in a bullish position and stock prices are above the PSAR indicator. 

However, the daily chart is sending caution signals so we need to pay attention to this early indication of weakness that may spill over to the weekly time frame.  On the daily chart the CCI(20) is above the zero level but falling.  Stock prices are now below the PSAR indicator.  This situation puts the daily time frame into a cautious mode.

On the hourly stock chart you can see that prices attempted to break through the overhead resistance for most of the day.  However, weakness overcame the market in the last hour of trading and stock prices finished sharply lower.

On the hourly chart the CCI(20) is in a bearish mode and prices are below the PSAR indicator.  In addition, a new reaction low was created by the sharp move down in prices at the end of the trading day.  This action has created significant weakness for the short term.

Towards the end of last week we suggested that taking some profits off the table and tightening stops would be an advisable course of action.  Today’s action would likely have exercised many of those stops.

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