Hi Everyone
Very weak action yesterday – with the main indices only poking through Friday’s high temporarily before slumping again. This is bearish, but still don’t be surprised if we see some sideways action.
The OVI Index (under the Volume Bars) is unsurprisingly still negative on all three main indices. The Nasdaq looks particularly wobbly and has done since early January well before this big down-move started. At the same time Implied Volatility has almost doubled. This means the market is reacting to increased volatility and bearishness. With such a big increase, at some point quite soon the market is likely to retrace upwards unless we’re in crash mode – and I don’t think we’re in that situation. So, with luck, we’ll get a fresh crop of bear flags appearing in the next couple of weeks.
Remember though, the golden rule is that we must only trade what we see, not what we think will happen.
For more details about the OVI go to http://ptc.flagtrader.com.
All the best
Guy