Daily Recap: Despite a misleading opening SPY soon lost the support it had in the last few days and started declining in an accelerated speed, getting very oversold towards the end of the day. I have been waiting for a red day like today since the 120 min short signal was triggered last week. I admit that with the volatility and the seesaw movement I had my doubts, but the system came through again and it looks like another profitable trade.
With the extreme oversold condition, the market will probably open with a gap up tomorrow, but I think we have another leg down before this decline is over. Of course it does not mean there must be another leg down and if the bounce is too strong and a sell signal is issued I will follow it (and publish of course). Having said that I will be surprised if the market goes over 168.92 but if it does the system will probably issue a 60 min short reversal signal.
Something to keep an eye on – believe it or not despite the decline today the 120 min positive divergence is still alive
Another thing – I heard on the radio today (I don’t watch TV) that some republicans are thinking out loud that defaulting is not a such bad idea, nothing will happen, and it’s just the fear mongering media trying to scare the public, so just as a reminder, usually when you don’t pay your debts the debtors repossess everything you own, your credit rate crashes and nobody is willing to lend you money, and it may happen if it just looks like you will not pay your debts. So you may want to think carefully before speaking out loud.
Battle Plan for the 10-9-2013
120 min Stop Loss and long signals at over 168.04
* Stop loss lines should be triggered if there is an interval close above them (i.e. 60 min or 120 min ), they are published in the daily blog and updated during trading hours on twitter.
* Take profit lines should be triggered immediately when crossed, they are usually issued during the trading day on twitter.
* Entry signals should be triggered when crossed, but take into account that until there is a confirmation (i.e. close of the interval across the entry signal) , the signal can become a reversal signal.
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