Tuesday, September 22, 2015

Market Update: Reprieve, more pain, repeat

My call on Saturday of an ascending bearish wedge in the market was absolutely spot on, so congratulations for those of you who took advantage. I personally shorted biotechnology (via LABD) which at one point Monday was up 18%. I also posted on SlopeofHope.com and website founder Tim Knight gave my chart my five stars!
I feel this is as appropriate point in the chart to provide an update on what I think is happening and where we may be headed. Indicators such as the Full Stochastics (5,3,3) are telling me that we are already entering the oversold region and yet the same indicator at (14,7,7) has just barely crossed over. The message this is sending is that our fall so far has just begun, but after two days a little reprieve is expected. The form of this "reprieve" is a descending bullish wedge on the 30 minute charts. This should be part 3 of our 5 part downwave. In the next day or two our decline should continue. The beginning of our double bottom I hinted at a few weeks ago is finally being put in, but seeing whether 1870 holds on S&P is the real issue.
The same descending bullish triangle has also appeared in biotech stocks and other index ETFs. See below: