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Is It a Real Break Down?

Looking at our Sigma Whole Market Index, it seems that the market broke through its uptrend channel.

Nevertheless, as we had a lot of false break in the past, we will remain highly vigilant and any sign of major reversal will be taken as a warning signal for our short term short positions.

We need a confirmed lower low in order to confirm the break down. (we call a confirmed lower low 2 consecutive closes below previous low)

Sigma Whole Market Index

Looking at our indicators, we can notice that the Sigma Trend Index fall in negative territory but other indexes remain in neutral territory (score at '3'). So, today's decline can't be interpreted as an impulsive move (we would need the Swing and/or the Power Level(PL) at '1' or '2' for an impulse to the downside).

Sigma Table


Conclusion:

Today's decline gives us some reasons to believe that the market could be at the early stage of a new downtrend. Nevertheless, we would like to see (in order to confirm the downtrend):

- a confirmed lower low on the Sigma Whole Market Index
- a second consecutive close in negative territory on the STI
- 2 consecutive close in negative territory on the breadth index
- the Swing or the Power Level at '1' or '2'

As we opened some short term short positions today, we will use relatively tight stop loss in order to manage those positions.

For those of you interested in our intraday move, you can visit our site during the day: we post all our trades in real time. You can also subscribe to our twitter account (@SigmaTradingOsc), it is free and you are updated on our latest view/trades.

Current positions:

Medium term positions:
- short 2 SPX at 1336.99
- short 1 NDX at 2578.46
- short 1.5 CAC at 3103.87

Short Term positions:
- short 1/2 CAC at 3283.69 (SL 3290)
- short 1/2 SPX at 1373.34 (SL 1383)

 

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