Quite a wild week we had in the markets last week. The big 1,000+ point drop in the Dow had many conspiracy theories circulating as to the real cause. In the end, it may not have been a trader error but rather a log jam of panic stops that piled up which the exchanges could not handle. Don’t expect that we have seen the last of this either.
One trader asked me if perhaps we had a Hindenburg Omen signal. This is, in simple terms, is divergence between the NYSE new 52 week highs and lows which signals and unhealthy market. A signal which has called every crash for the past 25 years. Well, we have had no HO signal at this point but it is time to start watching the market internals on a daily basis as an Omen could appear at any time.
The MTPredictor software did a great job of confirming the daily and weekly tops ahead of the market drop as well as setting up some monster short trades.
Check out tonight’s video for more analysis using the MTPredictor software:
To Your Trading Success,
JM
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