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Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

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A Short Term Bottom Could Be In Place

As the market was clearly running out of downside momentum, we decided to cut the 2nd half of our short position at 1280.67 [1334.07 - 1280.67 = 53.4 (gains)].

Looking at our indicator, we can notice they continue improve:

- The Sigma Trend Index (STI) moved from '-32' to '-14'

- More importantly, after 2 days in oversold territory, the Trend Level (TL) moved from 1(oversold) to 2 (negative).

Sigma Table

Looking at the chart, we can clearly see that the recent decline occurred in 5 waves and that the market found some support around December's top.

It looks like a meaningful bounce back could develop from here, but it is too early for going long now.

Sigma Trading Oscillator

Conclusion:

We consider the risk/reward isn't anymore in favour of short position. Nevertheless, it is too early for going long in this market.

In this context, we take a wait and see attitude, waiting for a nice opportunity (shouldn't take too long...)

We will open a half long position if/when the market is able to trade during at least 1hour above 1300 or if we get a clear impulse to the upside.

Current position: no position

Have a nice day,

 

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