• 262 days Could Crypto Overtake Traditional Investment?
  • 267 days Americans Still Quitting Jobs At Record Pace
  • 269 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 272 days Is The Dollar Too Strong?
  • 272 days Big Tech Disappoints Investors on Earnings Calls
  • 273 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 275 days China Is Quietly Trying To Distance Itself From Russia
  • 275 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 279 days Crypto Investors Won Big In 2021
  • 279 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 280 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 282 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 283 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 286 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 287 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 287 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 289 days Are NFTs About To Take Over Gaming?
  • 290 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 293 days What’s Causing Inflation In The United States?
  • 294 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. Markets
  3. Other

Bearish Reversal In Europe and Confirmed HS in US

Yesterday we wrote: "...Looking at the chart, recent move looks like an a-b move from an a-b-c (or a 1-2 from a 1-2-3-4-5 move). Patience, the breakout is probably for today, and I would prefer a breakout by the south..."

We can notice the head & shoulders we detected on the Sigma Whole Market Index was confirmed. The breakout is clear and the target (size of the head reported below the neckline) is the blue horizontal line.

Sigma Whole Market Index Chart

In Europe the situation is even more bearish. After a huge run up during the session (just after ECB's surprise rate cut), the market reversed from earlier gain and closed in negative territory. These kind of big reversals are highly bearish. Why? Because it means investors and traders knew they were running ahead of fundamentals and at the first signs of decline in the market, everyone is running to the exit => major reversal.

Usually this pattern (up or down) only occurs at major turnaround in the market. In this context, we expect a deep correction in Europe in coming days/weeks.

CAC40 Chart

DAX Chart

Estoxx Chart

The Sigma Trend Index declined in negative territory. Once again, the negative divergence we had few sessions ago (between the Sigma Whole Market Index and the Sigma Trend Index) was an early sign of correction.

Sigma Trend Index

Looking at our indicators, the Sigma Trend Index declined from '5' to '-4' and the Swing collapsed to '1', telling us yesterday's move was highly impulsive.

Sigma Short term Table

Unfortunately, the surge in the Dax reached our stop level and we closed the position. All other positions are still open, and the model computed new stop level for the NDX :

DAX Short Term table

NDX Short Term table

We closed our short position on the DAX @ 9102.17 => 8860.35 - 9102.17 = -241.82 (loss)

Short Term Trading Book:
- SPX: 1 short at 1742.85 (stop @ 1783, 3pts above the ST model to take into account bid/ask spread)
- NDX: 1 short at 3361.01 (stop @ 3445, 5pts above the ST model to take into account bid/ask spread)
- CAC: 1 short at 4272.14 (stop @ 4400, 5pts above the ST model to take into account bid/ask spread)
- DAX: no more position
- EStoxx: 1 short at 3027.17 (stop @ 3115, 5pts above the ST model to take into account bid/ask spread)

Medium Term Trading Book:
- No more medium term position at this stage.

 


For those of you interested in our trades or in our methodology, you can visit our site. A full description of our ST model and MT model is available on our site. You can also subscribe to our twitter account (@SigmaTradingOsc), it is free and you are updated on our latest view/trades.

 

Back to homepage

Leave a comment

Leave a comment