The market is now clearly in a down trend as many stocks are breaking down. However, there appeared to be one silver lining beneath the dark clouds. AIG had plunged from a high of $52 to $27 since the beginning of the year.
American International Group (AIG) looks good for a bounce trade now. It is the first week since the beginning of the year that we finally saw a potential reversal candlestick being formed. I will be looking to nibble a little bit at AIG. The fact that the reversal candlestick pattern being formed so close at the base of the Ichimoku cloud on the weekly chart will only add weight to the fact that selling has more or less subsided, for now. I will buy AIG here with a stop loss at $26.94.
AIG weekly chart
On Friday, the Dow Jones Index plunged and closed at more than -170pts. One closely watched sector, the Financials, managed to buck the trend by eking out a small gain. Looking at the chart of FAS below, one can interpret that a bounce might be coming soon. Look at the volume. At this current climate, any bounce should be sold if price action FAILED to breach the huge supply of overhead resistance. Investors would be dying to dump their shares when price action bounce.
Direxion Financial Bull (FAS)
Bank of America (BAC) displayed abnormal price action along with the rest of the banking stocks. Selling might have subsided for now. The financials lead the overall market lower and should rightly be the sector to lead the bounce as well. Do note that I am under no illusion that this is the right time to go long. We have to wait for a successful retest of its low before employing the 'buy-and-hold' strategy.
One have to be nimble and flexible when counter-trending against the down trend of the market. A worst case scenario is that the financial stocks might even be too weak to bounce at all. Trading is very dynamic and traders should employ their risk management strategies (position sizing etc) accordingly. Overall, I am bearish on the market.
Trade well, my friends.
American International Group (AIG) looks good for a bounce trade now. It is the first week since the beginning of the year that we finally saw a potential reversal candlestick being formed. I will be looking to nibble a little bit at AIG. The fact that the reversal candlestick pattern being formed so close at the base of the Ichimoku cloud on the weekly chart will only add weight to the fact that selling has more or less subsided, for now. I will buy AIG here with a stop loss at $26.94.
AIG weekly chart
On Friday, the Dow Jones Index plunged and closed at more than -170pts. One closely watched sector, the Financials, managed to buck the trend by eking out a small gain. Looking at the chart of FAS below, one can interpret that a bounce might be coming soon. Look at the volume. At this current climate, any bounce should be sold if price action FAILED to breach the huge supply of overhead resistance. Investors would be dying to dump their shares when price action bounce.
Direxion Financial Bull (FAS)
Bank of America (BAC) displayed abnormal price action along with the rest of the banking stocks. Selling might have subsided for now. The financials lead the overall market lower and should rightly be the sector to lead the bounce as well. Do note that I am under no illusion that this is the right time to go long. We have to wait for a successful retest of its low before employing the 'buy-and-hold' strategy.
One have to be nimble and flexible when counter-trending against the down trend of the market. A worst case scenario is that the financial stocks might even be too weak to bounce at all. Trading is very dynamic and traders should employ their risk management strategies (position sizing etc) accordingly. Overall, I am bearish on the market.
Trade well, my friends.
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