After a very ugly week, what's in store next? This is one very ugly chart with an almost 10% drop on the Nasdaq and the Russell but that's GOOD news as it's about where we expect the Central Banksters to step in and do something, before things turn more ugly . That's why we weren't pressing our bearish bets last week and we took our very aggressive TZA and XRT bets off the table in our Short-Term Portfolio and our $25,000 Portfolio because, with the indexes down this far, we expect at least a weak bounce to start the week – the question is – what happens after that? Very simply, per our 5% Rule™, when the market drops 5%, we expect a 1% retrace and, in the case of the Nasdaq and the Russell, we expect a 2% retrace for a " weak bounce ." Also, as you can see on our Big Chart, we have some serious support on the Dow at our "Must Hold" lijne at 16,000. There's pretty much no way it can fail that without a bounce. The Dow fell from 16,600 to 16,000 and that's only 3.6% but it's a strong support line but, as noted by Dave Fry in his Dow Chart , the real support comes at the 200 dma, at 15,750, and that's 5.1% today but that 200 dma will rise while it waits for the Dow so we can still expect a test at 15,800, which should be 5% by that time, assuming our weak bounce fails this week. On our other indexes, we'll be looking for: Dow 16,600 to 16,000 is 600 points (3.6%) and we're looking for a 120-point weak bounce to 16,120 and a 240-point strong bounce to 16,240 before we believe any sort of " rally ." S&P 1,900 to 1,815 is 85 points down (4.5%) so 17 points to 1,832 is weak and 17 more to 1,849 is strong but let's call it 1,850 before we're impressed. Nasdaq failed 4,375 and down to 4,000 (8.5%), also a strong technical support line that held up in late Jan/early Feb as well. Keep in mind, when an index is going to fall 10%, …
After a very ugly week, what's in store next?
This is one very ugly chart with an almost 10% drop on the Nasdaq and the Russell but that's GOOD news as it's about where we expect the Central Banksters to step in and do something, before things turn more ugly.
That's why we weren't pressing our bearish bets last week and we took our very aggressive TZA and XRT bets off the table in our Short-Term Portfolio and our $25,000 Portfolio because, with the indexes down this far, we expect at least a weak bounce to start the week – the question is – what happens after that?
Very simply, per our 5% Rule™, when the market drops 5%, we expect a 1% retrace and, in the case of the Nasdaq and the Russell, we expect a 2% retrace for a "weak bounce." Also, as you can see on our Big Chart, we have some serious support on the Dow at our "Must Hold" lijne at 16,000. There's pretty much no way it can fail that without a bounce.
The Dow fell from 16,600 to 16,000 and that's only 3.6% but it's a strong support line but, as noted by Dave Fry in his Dow Chart, the real support comes at the 200 dma, at 15,750, and that's 5.1% today but that 200 dma will rise while it waits for the Dow so we can still expect a test at 15,800, which should be 5% by that time, assuming our weak bounce fails this week.
On our other indexes, we'll be looking for:
- Dow 16,600 to 16,000 is 600 points (3.6%) and we're looking for a 120-point weak bounce to 16,120 and a 240-point strong bounce to 16,240 before we believe any sort of "rally."
- S&P 1,900 to 1,815 is 85 points down (4.5%) so 17 points to 1,832 is weak and 17 more to 1,849 is strong but let's call it 1,850 before we're impressed.
- Nasdaq failed 4,375 and down to 4,000 (8.5%), also a strong technical support line that held up in late Jan/early Feb as well. Keep in mind, when an index is going to fall 10%,
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