The S&P 500, Dow Jones Industrial Average, and Nasdaq all traded lower on Tuesday. Despite the intense two days of selling, we have yet to see any technical criteria suggesting a crash is imminent. Our Real Motion Trading Indicator above displays downward moderated momentum and forecasted a stalled rally and reversal.
The dots above represent Real Motion (trading momentum) and notice they never cross over the upper Bollinger band. They then proceeded to retreat lower, telegraphing stalled momentum, and a failed rally attempt. This same Real Motion pattern is illustrated on each chart.
Last weekend in our weekly Big View commentary, we highlighted that all the indices had nice technical gains.
In addition to our proprietary trading indicators, various momentum oscillators, technical gauges, and market phases, there are also retracement levels associated with the Fibonacci sequence that many traders watch so also useful to follow. They are 23.6%, 38.2%, 61.8%, and 78.6%. These Fibonacci levels correspond to previous support and resistance points. If the market continues to sell off, these levels will likely come into play to warn of further technical weakness.
Today, Grandpa Russell also held above the 50-day moving average and found support around the 23.6% Fibonacci level, as displayed above. Remember that having a trading strategy that takes advantage of volatility is your greatest protection, and that retracements are a normal part of the trading process.
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