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DOW is in Correction Mode

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Are bears in charge of the market? Some may ponder if it is double top? Where are bulls, a 200 points move within the trading day so far!

Dow started on a very strong note, but it is below waters as of this writing. My three cents on this, Dow is in its healthy correction mode. It has been in a overbought region for a while and it’s time for it to please bears for sometime so it can gather energy before the next bull leg starts.

dow-oct-17-2007.pngThe first level for support will be $13,750-800 followed by $13,550 (a 50Day moving average). If it falls below that, I will change my bias from bullish to bearish till I see sign of bulls’ gathering resurfacing. However, so far I am with bulls. Red histograms are already formed on the charts and are increasing in size, suggesting a correction in place. Both MACD and RSI are pointing lower and are soon to reach oversold regions.

If you would like to observe the real bull, check out SNP, FXI and PTR. A huge, huge move in prices supported by well above average trading volumes, specially past one week. I will soon cover this (open to registered members only) via sharing my perspective on why this is happening and how can we potentially benefit from the evolution of what I call “The C-Factor”.

Market are volatile this week, reminder that this is an options expiration week, so expect the unexpected,

Profitable trading, OP

Comments

4 responses to “DOW is in Correction Mode”

  1. Midas Avatar
    Midas

    Hi OP thanks for your opinion on the DOW I’m looking forward to to your comments on the C-Factor are you going to share this in the forum or are you going to open the newsletter again?
    I’m looking forward to signing up again as soon as you do have the time to reopen OPN

    Reply
  2. Dayton Avatar
    Dayton

    Is the SPX in correction or is it forming a cup and handle? That is a bullish sign.

    RUT definitely is forming a cup and handle. We are in the handle part it of it. if so, that is very bullish sign.

    Beauty is in the eye of the beholder.

    Reply
  3. Samuel Avatar
    Samuel

    Hi OP,

    I’m in the FAST trade which you covered on 11/10/07, I’m still holding on to the Nov 45 Call however
    the stock has been on a downtrend for the past few days. Taking a BIG hit on this one.
    I was thinking to get in again to average down my losses.
    Do you see any sign of reversal at the moment or rather do you see it as oversold ?

    Will greatly appreciate your kind advice.
    Thank You Very Much

    Reply
  4. OptionPundit Avatar
    OptionPundit

    Hi Samuel, if you look at the intraday chart, it did find support at 45 after gapping down, and then jumped back to 46 before falling further. I am not sure at what point did you purchase it.

    I shall not recommend averaging down. Rather you may want to look for converting this into a bear call spread (should you think that this will go down further). $42-42.5 appears strong support and it may bounce but watch it very closely if it falls below that. In case if u don’t want to take losses.

    Put this msg in the forum if u would like to discuss more,
    Profitable trading, OP

    Reply

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