September 1, 2011
By Geoff Bysshe
Today was a tough day for day traders because the market traded above its OR and then back below the OR low. This is price action that is typical of a market that needs a rest, and as I highlighted yesterday, the SPY is sitting at the 50% correction level from the recent lows which is a good level for us to expect it to stall or reverse.
Regardless of what I think of the possibilities for the market to correct, I have to stick by the basic rules that a positive stack in the pivots requires a break of S1 to move to a bearish bias. An additional reference point for the short bias is the low of 8/30 because it is the last low before the market broke out from its range defined by the 8/15 high. Until that low is broken I will not get too bearish.
With the market somewhat extended in the short term, I’d prefer OR Reversals vs. O.R. breakouts on the long side. For the most part I’ve tried to select focus stock that are not too extended, may have had a rest day, and have the pivots stacked in the direction of the trade.