Navigator Algorithm – 100% Cash – On Buy Alert
The markets will open down 2% this morning, but with yesterday under our belt, that is just a blip on the radar screen – no problem right? We have our big boy pants on now.
But in reality, price is retracing about half of yesterday’s spike low, so still in the realm of recovery. And I suspect there are a lot of shorts still out there hoping for a crash that will run for the hills on any strength today. Again, patience is a virtue for a good swing trade. We will see what the Navigator Algo telegraphs.
For day traders, I would focus on the spike base at 4346. There is potential for more short covering should prices get above it and find acceptance there.
Should sellers maintain control this morning, traders should note halfback at 4311.50 and the Volume POC / WEM low at 4275 or so, both of which would be downside targets short of yesterday’s low at 4212.75.
Yesterday’s sellers broke the October low and breezed right past the 10% correction before reversing course on the “mystery put seller” and closing well above both levels. The significant spike left at the end of the session puts spike rules into play this morning. With the current 70 handle gap down, the most bearish outcome of the spike would be to open below it, which appears unlikely at this writing.
Although we are opening within range, we closed at the highs yesterday on emotional buying. To open this far away from that settlement would imply that there will be some disappointed longs at the open who are suffering from poor location.
Wherever we go from here, we will probably retest yesterday’s low in a few days to shake out any weak hands left in the market. Typically we would rally a bit further first, perhaps to test the 200-day line from underneath. I am betting traders will extend the rally to the WEM high at 4489 before rolling over into a 5th wave down.
Russia / Ukraine is still the wildcard. We will hear from the Fed tomorrow. Perhaps the market will bide its time and do nothing until we hear from them.
A.F. Thornton