Buy or Sell at The Danger Point®

While the financial press (pictured at left) is fumbling around, trying to figure out if the market’s up or down, for this site it’s not about ‘up’ or ‘down’, but what the market itself is telling us.

Case in point, this past week.

Remember, at the beginning of the week, major brokers blew-up and locked up.

You couldn’t log-on whether long or short.

Surprising Speed

Posts on this site gave numerous clues (prior to last Monday), that we’re at risk of a downturn.

Two examples of potential downside were August 1st, Carvana’s ‘Interesting’ Numbers, posted here; the next day, Correction … or … Crash? posted here.

All released well before the Monday, August 5th, wipeout.

One thing to note as Ed Dowd points out (link here) is the speed of the downdraft.

Was this past Monday’s market action (and brokerage blow-ups) part of the new paradigm, the new normal?

With that, let’s take a look at what’s likely to happen (or set-up), next. The last post showed a potential short sale set-up (not advice, not a recommendation).

Finance Sector XLF, Daily

If price action continues higher, shown as the inserted back bar, the plan is to stand aside or exit, if short (not advice, not a recommendation).

Next, if we get downward action posting a new daily low, shown as the magenta bar, that’s a potential short entry (not advice, not a recommendation).

Of course, not shown is the scenario where the market does nothing and remains flat.

Based on last week’s hysteria and this additional update from Ed Dowd, link here, markets doing nothing seems to be the least likely outcome.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279