Following on from yesterday …
Good work from XOM breaking out as I’ve been highlighting. It’s been a classic OVI breakout setup so be sure to watch today’s video and previous ones over the last two weeks where I’ve been “stalking” it!
Also good reversal work from the S&P and the Dow, as highlighted recently too.
A couple of words on other matters:
OVI Sentiment Indicator:
The OVI Sentiment Indicator is a very important piece of work, but it’s essential you read it in the right way. It is NOT intended as a short term indicator. It IS intended as a long term barometer of market sentiment which you use to protect against a possible nasty retracement.
A few pointers:
- Statistically the OVI performs at its best in bullish scenarios. Therefore, when the OVIsi turns red you can use that as a potential warning against opening new long positions, or as a warning to ensure you have stops in place in case of a retracement on your existing long positions.
- In the case of XOM, this is a classic bullish setup where, despite it forming during a red OVIsi period, it was too good to ignore. However, as I mention in the video, you want to get into a no-lose situation as soon as possible, which that trade now allows you to do because it broke out with enough conviction.
- When the OVIsi turns red you can pay more attention to really classic bearish setups more than you would otherwise do.
Right now the OVIsi is still red, but the market has exhibited classic reversal signals from the indices (S&P and Dow) to some of the major stocks.
Today’s video shows the potential reversals I’ve highlighted recently with the S&P and the Dow. Both did as expected, but if you took advantage of it, make sure you protect your profits as the market is still unpredictable during this earnings period.
Also see how XOM broke nicely from its classic OVI-flag setup.
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