There is a very critical pattern developing in the key indexes. The next move could reveal some killer trades.

The seemingly mixed market yesterday has all three indexes either right at or very near a recent low. Yesterday was more of a tug of war between the support needed to recover and the gravity that has been inescapable for the markets since the beginning of the year. The key to the next great trade will depend on where we go in the next couple days. The NASDAQ is often the leading index and it slid below the recent low. Take a look:

Advertisement--When momentum gets exhausted, this pattern pays out. Check it out here.

The futures markets this morning are signaling that we are going to find that support and see a recovery in the short term but the long term reality is we are stuck in this range for a while. The VIX started to cool a bit but there is just too many unknowns floating around for us to see a solid trend develop. If we don’t see that support develop the next leg down could be ugly.

When a momentum runs out there are classic signs of exhaustion that signal a reversal is eminent. Those signals work when rallies run out of steam but also when corrections peter out. Lee Gettess does a great job our outlining what those signals are and how to use them to set up consistent winning trades. Check out how it works here.

Keep learning and trade wisely,

John Boyer


Market Wealth Daily