While I would not bet my life on it, we may have just put in the low of the day when only 52 contracts traded at our old triple POC low around 4368.25. We will see if the next move can break the intraday bear microchannel.
Clearly, the laws of gravity still apply, and this is a much-needed and understandable pullback. The NASDAQ 100 bears the brunt of the losses, as another rotation is underway just as we had anticipated.
Both the XLF and XLE are beneficiaries. The Founder’s Group is bringing those positions up to 10% each on the pullbacks, and we are adding another 5% to our S&P 500 position. This will put our targets at 10% XLF, 10% XLE, and 55% S&P 500.
You can use futures or at-the-money August or September options on the XLF, XLE, or SPY. You can also use the cash ETFs.
I do not expect this sell-off to bottom until tomorrow, but it makes sense to nibble just a bit on this first decline. Stops remain very important, and I would keep stops about 4 ticks below the low we just put in around 12:15 EST on any new positions.
Inevitably, when you are investing at an inflection point, there is less risk to loss and less certainty in the outcome.
As always, do your own homework,
A.F. Thornton