Hi Everyone
Just a quick update to my previous blog. The month of May seems to behaving its effect, as I mentioned before. With earnings season now over, the markets have fallen with several decent looking bull flags turning into rounded tops that didn’t make any losses.
From here we have three scenarios.
1. This could be a minor retracement before the market recovers again;or
2. A much steeper decline could follow; or
3. The market becomes rangebound.
My guess is that at some point we need to test the November or March lows. That’s a potential fall of at least 100 S&P points or 1,000 Dow points, which gives us plenty of scope for some nice bear flags if they start to form in the next few days.
As Flag-Traders we simply trade what we see, and we don’t fall into the trap of trying to predict. If a bunch of nice bear flag setups form, that’s the first clue. If they start breaking to the downside that’s our cue.
All the best
Guy