Needless to say, NYSI gave a sell today.
No surprise there. It's been about eleven trading weeks since the February lows, and NYMO cycles usually run about ten to fourteen weeks with the momentum low often coming on the nose in the twelfth week. And both the NYMO and the NYSI have been giving plenty of warnings this day would come. Those red circles on NYMO and that flat line on the NYSI have been sitting on the chart in post #53 for a long time.
TNA lost 5 percent on the close on this NYSI swing. Defensive stops are always good (see previous posts on stops for the last two NYSI bounces), but especially when the indicators are screaming warning signs.
What do we want to see now in the context of the overall bull market? Once again, we want to see a low above a low on the NYMO, preferably with a price divergence, followed by a crossing of the zero line to turn up the NYSI. I, for one, would like to see at least another two or three weeks to the downside (some real fear wouldn't hurt, trading-wise) to really set up the next blast to the upside. However, just take the signals -- given the way this market's been acting and given that today's drop appears to be a classic bull-market translation, it wouldn't surprise me if that blast showed up TOMORROW.
In the meantime, it's be short or be flat -- try some leveraged short ETFs and like TZA or TWM, BGZ, FAZ, etc. -- sell the bounces, buy puts, sell calls, whatever one's individual trading style. The bears have the ball. Let's see how far they can run with it.
"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx (on market history?).
“I've learned in options trading simple is best and the obvious is often the most elusive to recognize.”
"The god of trading rewards persistence, experience and discipline, and absolutely nothing else."