Pivot Point

Well, what I'd been hoping for is actually happening in the market. We are not at a pivot point on the S&P and just about there with the Dow, minus about 250 points on the Dow. This truly is a thing of beauty.

If we look at the M pattern, and M does not stand for Murder, rather Money, if you know what you're doing. On the Monthly, we crossed below the 200 EMA, which is significant, signifying a greater bearish sentiment. However, without looking at moving averages, it would be significant if on a monthly close if we closed below the 7200 for the Dow and below 770 for the S&P.

The market will look to see if they can bring buyers in at these points, which means they would take the market further down to see if they can shake out all the sellers. So, we may see some very interesting actions taking place which I see to be fairly volatile over the next couple weeks to come.

It would be very significant if the close is too much below those numbers because it is breaking the pattern, signifying there is a VERY bearish sentiment in the market and we've not hit bottom yet.

Would it be The Depression? I don't remember what the analysis was for the Dow, but that would mean the S&P would need to reach around the 200-300 area. But, keep in mind, that millionaires were still created during The Great Depression. There are still people who make money during economically challenged times.

If the 7200 area on the Dow does not hold, then 5100 would be the next likely level of support. It doesn't take a rocket science to see the market is very bearish, but just like anything, there needs to be some pressure relief. What I've noticed is the market often likes to work in 3, 5, 7 type patterns. This would be 3 strong months down and often December is usually a fairly bullish time. We'll see if this is the case or not.

I honestly thought that we would have a bear trap type movement after the elections, to give people some hope, but maybe the market really is not too thrilled with the new president elect. All the same, I'm fine with the market tanking and if this market doesn't work, then I can always move to another market or differential to trade. That's one of the beauties of being a technical trader. A different differential would just mean that I would have to learn new terminology and logistics, but the technicals are the same.

There are opportunities even in what is perceived very grim circumstances, if we would allow ourselves to be opened to them.

Always manage your risk in trading, appropriately setting your stops, being knowledgable, size of position and never trade with hope. We can see when we do that, it always ends up biting us in the booty.

It would not be unreasonable to test this point for a few months and see some big volatility. Once again, more opportunities.
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