Obviously traders are expecting the worse from the market at this point in time.

And that may very well come to fruition, but you have to be willing to work within the confines of this market and what it is willing to offer. While the short setups are enticing at these levels, they don’t come without a ton of risk, because when the market how sold off nearly 80 points on the S&P 500 as it has in the past week, there ends up being an enormous amount of increased short positions that when the market is ready to squeeze, and will be the backbone of the market rally. So the key is not to extract every last ounce of profits to be made from shorting the market, rather, you should attempt to position your self for the bounce, as the Daily SharePlanner Reversal Indicator suggests:

SharePlanner Reversal Indicator Daily 8-6-14

And as you can see on the Weekly SPRI below, the S&P 500 is at a key support level on the rising trend-line. Coupled with the fact that the Weekly SPRI is flashing the same buy signal, I’d encourage you to tread lightly on the short side. 

Here’s the Weekly SPRI:

SharePlanner Reversal Indicator Weekly 8-6-14

 

Hang tight  in this market – it is not an easy one for trading, and I’m quite certain that bears are positioning themselves for a nasty short squeeze when the dead cat bounce does in fact happen. 

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