Wow! What a day yesterday was. Here I was stuck short and hating it but around 10am that all changed as the market started to drop, and continued down all day long. Needless to say I'm a happy person today. My underwater positions turned into a profit... yippee. Ok, for today we see some follow-through on the downside as the futures lost the horizontal green trendline of support, which was the prior multi-highs back in August.
The only obvious lower trendline for the next support is the one in yellow, but the "even number" level of 2900 (26,000 DOW) will likely provide some kind of bounce (if we get there?). For today though I'm neutral as most days after a large drop day are "pause" days. Meaning they chop around a little going slightly lower then back up and commonly end the day around flat. Tomorrow and Friday is what I'm focused on.
I'd like to see a nice buy signal setup, or sell... but that would take a strong move up starting today, tomorrow and Friday, and that's unlikely. Basically, I'll be in cash for the next few days waiting for the next strong setup... buy or sell. Again, I don't see it being a sell as the bears are now fully awake... and they have bulls trapped long now. So again, odds are we'll drift lower the next few days (not big like yesterday) to lure in bears to short looking for another huge drop. It should also cause the bulls to capitulate.
Once that happens we should get a nice move back up. How much is anyone's guess as I have a downside target (via a FP on the QQQ) that tells me we will revisit the June, 2019 lows... but when is the question? Will it be in October, or November? I don't know? I'm just going to stick with what the market gives me each day and go with that. Have a great day.