Watch For A Reversal In The Markets

Watch For A Reversal In The Markets

By David Grandey
All About Trends  

Tuesday was day two to the upside of the potential Elliot Wave B Wave up. There is an old adage that comes to mind right here and that is:

On The Third To Fourth Day Watch For A Reversal

This is also why an IBD O’Neil follow through day takes place on the 4th through the 7th day because if the market is going to fail is usually before the 4th day. At the rate we are climbing the 50 day average and the 50% Fibonacci level are just a day away. On your mark, get set, wait.

Over the weekend we showed you Fibonacci levels on the way down and why we stopped where we did (61.8%). Now let’s look at some upside levels per Fibonacci theory. In addition to that, we’ve also got overhead supply and the 50 day average to deal with too.

Said another way? There’s upside resistance all over the place.

Notice how we are fast approaching the 38.2% Fibonacci level? If we are going to the 50 day average, the 50% Fibonacci level we need to get through this level first. Heck at the rate we are going it’s going to be one more day and we are there — or at least in the zone. Then we have some choices. Wait to see what develops or start to lay out some probing positions in the INVERSE INDEX ETF’s and select individual issues on the short side.

This index is even weaker than the S&P 500 and has led the markets down. That’s always the way it is with the OTC markets. They lead to the upside and they lead to the downside. Odds favor this index not making it over the 38.2% Fibonacci level.

Inverse Index Action ETF’s (Short Selling Exposure for IRA’s)

Recently we talked about Elliot Wave ABC’s to the downside. The flipside to that are ABC’s to the upside. If the indexes are in the process of building out potential ABCs to the downside then it stands to reason that INVERSE ETF’s would be building out ABC’s to the upside.

If you know the All About Trends longside set-ups then the short side set-ups are just as easy. The difference between the two when viewing charts are that the short side patterns we look for are longside patterns inverted. That’s pretty neat, and keeps it simple.

Each of the inverse ETFs are pulling back off of their highs, just setting up a prime time, low risk buying opportunity which allows us to have short exposure in our IRAs.

So the next couple of days, we will look to exit our remaining long positions to deploy cash into individual stocks that are setting up on the short-sell side and to buy inverse ETFs on the longside.

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