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Tuesday, January 31, 2017

Investors' Panic - Market update 1/31/2017 Technical Tuesday

Surveying the damage on this technical Tuesday. I got my hands full; I'm still updating charts, and I've already revised my outlook more than once. In short, After yesterday's sharp sell-off, I'd expect this snap-back rally to continue for a day or 2.

Short term support (Dow 19,999, SPX 2282) broke, and the 5 min charts were destroyed, but not seeing any damage to the 60 min charts. Damage means key support is breaking, and so far we haven't seen that. Energy may have took the brunt of it, but Oil isn't broken.

The S&P isn't broken, and until it is I wouldn't be a seller here. In fact, now that we got our pullback, I'm cautiously bullish again. If the 2277 level were to break, and take out support at my blue line, I'd get short term bearish again.

The financial networks managed to create a lot of panic on Monday, calling yesterday's 120 point sell-off the,"worst sell-off since Sept. of last year", or the "worst day of 2017". The blond on CNBC's World Wide Exchange even went as far as to call it a "correction". A 1 day event isn't a correction. Turn off the Fake News, or it will negatively impact your trade.

Airlines were sold. We don't trade Airlines, but I could have told you to sell $AAL. Holding support in what looks like consolidation in a bull market.

The Russell pulled back further than expected, but the 1347 level remains the level to watch. Looks like it could be the start of a correction, but it's too soon to tell. The pattern has changed slightly, but as long as the lower triangle line in purple doesn't break down, I can't get too bearish.

I can tell you the selling was way over-done with the $VIX up 20%. Let the $VIX be your guide, not the emotional crybabies trolling my twitter feed.

Take Care, AA

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