Oh yes, this is what the bears have been waiting and hoping for. Same with the late bulls. So what could go wrong with this probe to the downside? Heck, I’ve long believed we needed a pullback and nearly gave up on the thought. So what now?
I honestly have no idea. The 50-day MA has been breached, which is going to give bears a defined area of risk. Could we trend down to 1,240? Sure.
However, I’m cautious that that will happen. Why? Well, the dollar for one. I am expecting the dollar to complete it’s short daily cycle pop any day now and start to head south once again. Second, the action here seems eerily similar to the November pullback. 50-ish points and then……continuation.
If the down move fails here, watch out. Shorts will be squeezed and new animated cartoons will surface, telling us to “buy the dip – stupid.” I’d say we’re at a critical juncture, but it seems every day there’s some new critical juncture.
Ides of March, oil, silver, gold, war, etc. Don’t know, but it won’t surprise me to see this down move fail again and Helicopter Ben might chime in too. He’s been quiet of late.
On a side note, gold tagged the 20 DMA, so as stated in the plan, I have added some additional exposure to SLW via June calls. It may hurt initially, but will kick in like a Turbo as the dollar drops into its intermediate cycle bottom. Whoosh.
Wishing you all the best, see both sides of every trade and trade the extremes – always!