A major down day in the equity indexes today with the SPX looking like it wants to test the lower trend line at the very least.
The daily model was about 50% correct today with the massive sell off the market made, however the recovery that the pattern called for was quickly snuffed out as sellers remained the dominant force.
It would seem that today definitely confirms that corrective wave having begun and lower prices in the offing and as I have been saying, the nature of this decline is going to speak volumes about the long term viability of equity prices. The volume pattern does not bode well for the upside and thus the 45% equity exposure.
I have begun to even scale this allocation back not through stock sales but purchasing portfolio insurance by way of put options. This is an excellent way to protect the purchasing power of your investments without the need to pay large capital gains taxes. The only tax you are going to pay will be on the appreciation of the options once they are sold.
The NASDAQ has been getting hit harder than the broader market and most of that is due to the weakness in technology issues.I would continue to look for this trend to continue.
For those of you who have been taking advantage of the daily trading patterns, below you will find the prospective pattern for Thursday.
Open to 11:15am - LOWER
11:15am to 1:35 - HIGHER
1:35pm to 3:20pm - CHOPPY CONSOLIDATION
3:20 to Close - SHARPLY HIGHER
REMEMBER, WE STILL NEED TECHNICAL CONFIRMATIONS AT THESE TIMES IN ORDER TO WARRANT A TRADE.
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