When the world is running down
You make the best of what's still around – Police
This is the chart we'll be watching today:
It's Dave Fry's McClellan Oscillator and -100 is very, very oversold so we can expect some kind of bounce for any silly reason and what we'll be watching closely is how fast a move up works off the oversold condition. If, for example, we come back 13 points on the S&P (weak bounce) to 1,658 and the Ocillator moves all the way back to 0 (neutral) - then the market is likely due for much more pain ahead.
I won't get into the macros again – you can follow the links for that – since I sent out the Alert we had a beat from Best Buy (BBY) and Home Depot beat and raised guidance so that's given us an excuse to bounce higher but also gives us a chance to pick up some inexpensive hedges but, first, our target levels.
At the 3.75% line, we expect a 20% retrace as "normal" and not a break of the trend. A 40% retrace (strong bounce) is a sign of possible…
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