Hi Everyone
I really hope you paid attention to my blogs last week. If you did, you’d be in great shape this week.
Let me emphasise one thing. There is absolutely no surprise to me about what’s happened this week.
The chart patterns last week AND the OVI on the S&P and Nasdaq were signalling big selling action by the big players.
The OVI basically measures the “Hidden Money”, ie the money that isn’t typically being seen by 99.99% of traders out there. The OVI plus the bearish chart patterns (remember, the chart patterns come first) both suggested sell-off was in the works.
Notice what I said … “was in the works”. In other words, although prices hadn’t capitulated last week, that’s when the sell-off was happening BIG TIME. People without the OVI just couldn’t see it. But it started with the GS debacle. And while I don’t expect GS to pay a massive penalty for what they’ve been accused of (and frankly I don’t think they did much if anything wrong anyway), as I said at the time, the financial sector will often LEAD the rest of the market.
Since that time, the charts have been messier and the OVI also turned downwards, ultimately into negative territory. If you’ve been reading my emails and blogs, you cannot have been surprised. And I’m not given to this nonsense about “faulty trades” with PG. If there was a system failure with PG it was all part of something wider anyway. That was my first instinct, and that’s still my view. Why? Because the markets have continued to drift lower.
So, what from here? Well the markets are weak right now and for good reasons. I expect more volatility, with some big retracements back and forth. But finally we’re seeing the markets reflecting the reality. The reality is that there’s a lot of uncertainty out there. This is also reflected in the UK’s first hung parliament for almost 40 years.
I’m looking for Bear Flags and Bear breakouts from now. Up until this week there weren’t many to choose from – but luckily the OVI was already ringing the alarm bells together with that “megaphone” pattern I outlined before.
If you didn’t read my email or blog from 26 April, please take a look at it now so you can see exactly why I was concerned. Here’s the link and the chart I was referring to:
Finally, due to demand, next week I will be closing the doors to new entrants in my Private Tutorial Club (PTC).
If you don’t have the OVI, you must now see how powerful it is to your overall trading. Get it now http://ptc.flagtrader.com where I will also help tutor you on a regular basis.
All the best
