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Here is an excerpt from our trading plan.
We’ve been referring to the big sell-off that started on July 31 as Major Pullback2. Major Pullback1 was the big sell-off back in May. These are all big sell-offs within the Up Trend that started on 12/26/18. This Up Trend by our calculation is still intact. If you are new to our system, please take a look here for a summary of all our terminology.
$SPX $NDX gapped up this morning as expected. There were enough bargain hunters to carry prices all the way up into the zone between Resistance2 and Resistance3.
So is the current Major Pullback2 going to resume its selling momentum? Or is this the start of Surge7 of the current Up Trend? Let’s see what market internals have to say.
Updates from market internals
As we mentioned before, when there is a big sell-off like this one, we need to see $VIX $VXN charts form multiple tops over multiple days before they can get back to normal, and the Up Trend can resume. So far we’ve only seen one top that’s almost done forming today. So the odds favor more top formation, and in the process, more selling of stocks.
The rest of this article covers:
Updates from market internals (more)
Support and resistance levels
Low-risk high-reward trade setups to consider
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