U.S. stocks on Monday fell for a third session, with the S&P 500 closing below its 200-day moving average and the Nasdaq Composite off 8.6 percent from its September record, leading traders to warn of a deeper correction, but charts suggest a potential buying opportunity.
The U.S. market has been running hot for months. It's a well-established and long-term sustainable trend propelled by 'funny money' available at virtually no interest. Fundamentally, its suspect, but technically this has been a trading opportunity not to be missed.
I have been calling the DOW, S&P 500 and NASDAQ higher for months in CNBC columns. I have also warned that these markets will pull back and that a 10 percent correction is a buying opportunity.
The U.S. market has been running hot for months. It's a well-established and long-term sustainable trend propelled by 'funny money' available at virtually no interest. Fundamentally, its suspect, but technically this has been a trading opportunity not to be missed.
I have been calling the DOW, S&P 500 and NASDAQ higher for months in CNBC columns. I have also warned that these markets will pull back and that a 10 percent correction is a buying opportunity.
If you understand where a 10 percent pullback is located, you will have the opportunity to take advantage of this temporary correction in the trend. A fall below 10 percent is a signal of a potential trend change.
A 10 percent correction in the DOW would bring the market back to the center line of the long-term uptrend. That's still bullish in anyone's language. A 10 percent correction on the NASDAQ would bring the market back to just above the support level and still well within the long-term up-sloping trading band.
A 10 percent correction on the S&P is more serious. This would drop the S&P below the support level near 1850 and below the lower edge of the long-term Guppy Multiple Moving Average (GMMA). This development would signal a high potential for a major trend change. The S&P is the canary in the coal mine.
Fundamentally, the biggest threat to markets is Ebola, not ISIS. Ebola has the capacity to rapidly overwhelm health systems and paralyze work environments. You have a choice: Join the screaming chicken littles or watch the charts and act accordingly. I know what we will be doing.
source: CNBC ...Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders – www.guppytraders.com. He is a regular guest on CNBCAsia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe.
A 10 percent correction in the DOW would bring the market back to the center line of the long-term uptrend. That's still bullish in anyone's language. A 10 percent correction on the NASDAQ would bring the market back to just above the support level and still well within the long-term up-sloping trading band.
A 10 percent correction on the S&P is more serious. This would drop the S&P below the support level near 1850 and below the lower edge of the long-term Guppy Multiple Moving Average (GMMA). This development would signal a high potential for a major trend change. The S&P is the canary in the coal mine.
Fundamentally, the biggest threat to markets is Ebola, not ISIS. Ebola has the capacity to rapidly overwhelm health systems and paralyze work environments. You have a choice: Join the screaming chicken littles or watch the charts and act accordingly. I know what we will be doing.
source: CNBC ...Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders – www.guppytraders.com. He is a regular guest on CNBCAsia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe.