Technically the MKT has produce a negative signal into the EXTREME of a BEAR TREND move and will need to hold structure if it is going to maintain an aggressive sell posture. Don't press it. Although the MKT is vulnerable a break in momentum has the potential to spark a sharp corrective rally.
Key off the 116-27 Inflection Pivot as the structure turning point.
On the SELL side downside BREAKOUT strategies below the 115-15 support pivot are valid and should continue to hold negative structure if they are going to extend. Get in to these trades sooner (higher) than later (lower) as new weakness is expected to be stop and go. A more conservative strategy is to FADE a positive reaction after a negative breakdown signal and even better to wait for a negative REVERSAL off this corrective rise rather than stepping in front of it. FADE and REVERSAL are recommended at 116-27, 117-16 and 118-05 especially after a sharp corrective rise. The MKT is negative but is also extended and the probability of a corrective rise is high. Wait for an exhaustive signals or confirmation to jump on.
On the BUY side BREAKOUT strategies above 116-27 should have aggressive trail stops and tighter profit targets. There is a good chance for a corrective turn but profit targets and position management should be tight as this is more likely a rally to sell. If you get on, ride it until structure is broken and then look to go the other way. BUY REVERSAL strategies off the 115-15 and 114-24 support level will provide opportunity but will work best after a sharp trade lower verses a steady decline. Expectations are for no follow through not a reversal of sentiment. Keep risk management and profit targets tight to reduce giveback as the underlying technical foundation today is negative. Avoid FADE BUYS as the negative trend remains enforce with sell FADE opportunities the better place to step out.
Note: Just because the MKT is extended does not mean it cannot get more extended. Any long ideas should wait for a signal don't force one.
JS
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