Stocks continue to weaken as the market continues its slide as the Euro continues its free fall. Continued fears about the viability of the European Union has currency traders pushing the Euro lower. It appears the general consensus is the union will be unable to weather the debt storms created by Greece, Spain, Portugal, Italy and others are coming to a head. The market is pricing in the collapse of the union at the moment and it appears bound and determined to price in its collapse. Volatility and fear will continue to dominate this market and this correction continues to have a high probability of lasting much longer.
Many stocks are at tipping points, pivotal points where they could either break wide open or find support. We have been very fortunate at Big Wave Trading to have avoided much of the demise and have taken advantage of a few shorts. While we are oversold here, a break of few pivotal points may point for a prolonged downward spiral of the market. Cash will continue to be king in this market and it will be a while before we see a new healthy uptrend. For the time being the path of least resistance continues to be down and there isn’t any sense of fighting it.
Not much would surprise us here, a big move down or even a move higher. A low volume rally back up into the 50dma would certainly help relieve the oversold conditions. Not too mention we would be able to have higher probability short setups. Getting ultra short here isn’t the best thing as big snap back rallies become more probable as oversold conditions deepen. At this point, we aren’t as nearly as over sold as we were on 5/7 but it is fast approaching. If you do short or go long ultra short ETFs it is best to set tight cut loss strategy.
These types of markets allow you to do some homework, our forums are filled with educational articles on the market. It really is a great time for anyone who is new to the market to do the necessary studying it takes to become a real professional in the market.
DO NOT OVERTRADE this market and make sure you check out our Gold Package for the educational articles as well as market psychology articles. It’ll make you a more complete trader.
Disclosure: No Positions in Stocks Tagged