We said last week that a bounce was likely and we got that and more. The S&P retraced 61.8% of the previous week’s decline. So did we pause at and why is 61.8% important. This retracement level is a big and common Fibonacci Retracement level many traders watch for a continuation of the previous trend. 

Looking at the Weekly ES Futures contract we ended with an inside candle. Neither bullish or bearish. Just consolidating from short term oversold levels. We have found resistance at the 8 period SMA and horizontal resistance. 

 

The daily shows an impressive 6 day move off the lows.  We have tagged the 21 period. At a RSI of 51 the contract is in neutral territory not giving us much guidance so let’s drill down even further to the 1 hour.

 

We found a resistance area which was further fueled by the Russia news. As of close we are under both the 8 & 21 period SMAs but the signs of the trend is weakening by the downward angle of the RSI slope starting from Thursday. 

So what does this mean? Unless we can push about that 21 day SMA with conviction, given the Fib level we saw reaction from, some trend weakening on short time frame

s after 6 days in the gree, the odds of a pullback from last Sunday have increased considerably. Nothing has been confirmed but if I were long I’d would be thinking of taking some profits and see if the 2750 level can be taken out or truely does serve as a top of a corrective bounce in a larger down move eventually taking out the lows from two weeks ago. What could this look like if we are to get a larger 20% or so pullback? 

 

A couple of areas and lines to watch. First is the longer term trend line support starting from the lows in 09′ during the Financial Crisis. Another is the good ole’ Fib levels. The 23% retracement comes in around the 2354 area and the 50 period MA is slightly above that.

 

 

 

 

 

 

One thing I’m reminding folks is that given the 10yr massive bull run, even a 20-30% pull back to the 200day is not inconceivable nor would it be a bad thing for the ongoing health of the market. 

 

 

It’s a time to take a look at some beaten down stocks with good fundamentals that have been pulled down with the rest of the market. Micron (MU) is one of them. 

The chart looks potentially scary but also offers a clear stop loss if everything goes to hell. So why take a chance on a stock sitting on support? I haven’t seen financials like this in a long time. Here are some of the highlights: 

P/E – 6.38

PEG – .23!

P/C – 7.88

LT Debt/Eq – .34

EPS -6.35

EPS nxt Yr – 8.51

New Analyst Strong Buy and Overweight recommendations. 

Buy with a stop below $40 for shorter time frame traders or at $32 for longer term investors. TP if breaks downward trend line of mid 70’s. 

After a brutal week for bulls the $SPY ended at oversold level with a reversal daily candle. We do not know whether the current corrective action is JUST a normal, healthy correction, or the beginning of something bigger. The markets have given a sell signal and the current correctional process is underway. But, with the market now oversold on a very short-term basis a counter-trend rally over the next week, or two, should be expected. 

The larger concern is the “sell signal” which has been triggered at abnormally high levels still remains. Such suggests there remains “fuel” for either a “deeper correction” or a “consolidation” of the markets in the weeks ahead to work off that overbought condition. 

In the very short-term the market did attempt to rally mid-week and failed at the 50-sma. The breakdown on Friday led to a successful test of the 200-sma and the market rebounded above the previous lows.

  • If you are a trader, there is a decent setup for a “trading opportunity.”
  • If you are longer-term investor, wait for a confirmation the market has regained its “bullish bias.” 

So what are the levels? The big one for the spy is the $270 area. If we draw our Fib levels, the 270 handle comes in right at the 50% retracement of the highs to the lows hit friday. This also was a critical support and now resistance level traders were watching on the way down. We will also want to see prices stabilize above the 8 and 21 sma to ensure a corrective move is finalized. What’s a little troubling is although we did find support off the 200 sma, we did dip below it and a longer term trend line dating back the the Asian financial crises in 2015. 

  1. Learn to trust yourself and your team. Crossing the knowing-doing gap in a startup can create feelings of trepidation, fear, and embarrassing consequences of perceived failure. These are self-imposed barriers based mainly on your own negative self-talk. Learning to trust yourself is critical. Then you have to listen to and trust your team.
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These principles embody an incremental approach to the knowing-doing obstacles that entrepreneurs and their teams have to face head-on:

  • Overcoming the resistance of inertia. It’s easy for professionals to convince themselves that it’s okay to stay in the knowing stage a little longer while everyone strives for a greater level of confidence. Sometimes intellectual arrogance drives the conclusion that knowing is the most important thing, and almost the same thing as doing. It is not.
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