Blood letting from last week's five day rally was clear today as the major indexes fell more than 7.5% across the board. Looking at the chart of the DOW and SPX, we are clearly below Fib resistance as well as the intermediate lows of October. Not to mention that the huge bearish engulfing pattern today only added to the weak outlook.
I was a little early to close some of my short positions from a while back today, as the major just kept falling right into the close. I am however reluctant to go short here seeing as how the risk/reward is still favoring the bullz over the next month or so. As such, I'll be looking to sit on more and more cash until we reach the lows all over again.
Of the major currencies, the EUR still looks like the only one with a nice base left in place. You can see that the negative action today still didn't break the recent lows.
The GBP on the other hand I believe has much more room to fall and the bearish engulfing pattern today and a close below the Fib resistance levels is making me cautious about entering a long position until we get further down.
MTW is a nice short opportunity I discovered today. Notice the clean move up to resistance. I'm expecting this to get back around $5 during this leg of the down turn.
Hope everyone had a great thanksgiving and let's get back into the swing of things full time! Happy Trading!
