BROAD STOCK MARKET TRADE ALERT (2:30 pm EST)
The broad stock market is falling today and the DOW seems to be finding support around the 17,800 level. In Monday's blog I wrote: "If the market does move down this week, it may be a small corrective dip (say, to the 17,800 - 18,000 area) from which the rally could resume into early April." We may be getting this now with the possibility of a strong rally over the next few weeks. The reason we now have a good entry point to buy is because there is a very important support level for the DOW at the March 11 low of 17,627, which is only about 200 points below the current price. By placing a tight stop loss at that level, our maximum loss should the market continue down would only be about 1%. This is a good risk/reward ratio especially as other technical indicators are suggesting markets will rise higher into April (the intermarket bearish divergence signal that I mentioned in Monday's blog may not be that significant as it only appeared in the combined composite NASDAQ chart, not in the contract charts). If taking this trade, I would advise setting an automatic stop loss around 17,600 as if the DOW decides to turn bearish, the index could fall sharply. A clear break below 17,600 would likely indicate that the current cycle is turning bearish, and the markets would likely be pointed down for at least six more weeks. Opening a long position in the broad stock market today.
The broad stock market is falling today and the DOW seems to be finding support around the 17,800 level. In Monday's blog I wrote: "If the market does move down this week, it may be a small corrective dip (say, to the 17,800 - 18,000 area) from which the rally could resume into early April." We may be getting this now with the possibility of a strong rally over the next few weeks. The reason we now have a good entry point to buy is because there is a very important support level for the DOW at the March 11 low of 17,627, which is only about 200 points below the current price. By placing a tight stop loss at that level, our maximum loss should the market continue down would only be about 1%. This is a good risk/reward ratio especially as other technical indicators are suggesting markets will rise higher into April (the intermarket bearish divergence signal that I mentioned in Monday's blog may not be that significant as it only appeared in the combined composite NASDAQ chart, not in the contract charts). If taking this trade, I would advise setting an automatic stop loss around 17,600 as if the DOW decides to turn bearish, the index could fall sharply. A clear break below 17,600 would likely indicate that the current cycle is turning bearish, and the markets would likely be pointed down for at least six more weeks. Opening a long position in the broad stock market today.
RSS Feed