S&P 500
The S&P 500 imploded during the trading session on Monday, slicing through the 2700 level like it didn’t even exist. As we close the day, we were testing the 2600 level, and a trend line on the longer-term charts. If we break down below the 2550 handle, the bottom could fall out of this market. That being said, I think that this is healthy for the market longer term, as we have seen far too much bullish pressure and it certainly a parabolic move. I don’t know that I would be sure to this market, I think it’s probably more likely to be a situation where you will be paid to wait, as the famous trader Jesse Livermore once suggested. I think if you are cautious and wait for signs of stability, you may be able to pick up a large move to the upside.
NASDAQ 100
The NASDAQ 100 fell apart as well, reaching down towards the 6400 level. If we break down below the trend line that I have on the chart, it’s very likely that we will go to at least the 6200 level, if not the 6000 level. However, the market is a very likely to see some type of massive meltdown, it’s more like we have gotten far too overly parabolic and bullish, and that means that the “weak hands” should continue to get out of the market. I think that the NASDAQ 100 will be very much like the S&P 500, offering value on the pullback, but don’t be the first person jumping into the market, wait for the market to stabilize or a bounce before you start getting involved. I anticipate that we will have buyers and value hunters coming soon, but I’m going to let the signal form on a daily chart. I will keep you updated here at Daily Forex as to what I’m doing.
