FWIW, I have similar thoughts for the SOX and NBI:
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Posted 13 September 2020 - 02:21 AM
I have two models I'm working with at the moment. One has the market with a small bounce Monday or Tuesday which will eventually see another low. The other has us heading straight down Sunday night. I could be wrong on both, but I don't believe the market will hold a 3rd attempt at the low.
Edited by orange, 13 September 2020 - 02:22 AM.
Posted 13 September 2020 - 08:39 AM
A gentle reminder,
overswing conditions can occur in both directions. Considering how far the indices, specially $NDX, exceeded the averages that may lead to similar excess on the downside.
In fact it happened in March April when - so clearly illustrated by the chart posted by steadyquest - the index quickly dropped 1500 to cross the 200ma and traveled another 1500 to bottom in April.
civil war IS a possibility
massive redemptions of retirement funds
robo trading coming home to roost
On the long term price is an expression of value, on shorter term it is a display of emotional conditions. Emotions rule and can get out of control.
On Friday, as $NDX tested and took out a swing low, index options implied volatility was LOWER then at the swing high on September 2.
That is a screaming example of complacency.
Important downmoves seldom end in complacency, they usually end in near panic or panic conditions.