We are not surprised for this downside or that it developed in the shape of an intraday reversal. our expectations for the market to correct this week have been right, but in this particular case I failed to exercise due diligence on TNA. So I went greedy yesterday ignoring that I was forcing our longs at the top of wave 2 (link) so while we correctly called for TNA to top around 105.19 —where Joel sold— and 105.58 with upper resistance at 105.84 —level I wanted to sell— we did not dig enough into the pattern to recognize the potential danger. This was a clear mistake on my side. The fact that we sold other ETFs and stocks only contributes to confirm I should have looked deeper into our main trading instrument. I like coming after my mistakes it’s the only way I can prevent them in the future.
Open Interest continue telling us nothing spectacular on the upside is going to happen at the moment PCR: for EOW1 expiration on Fri 4/7/17 is at 4.746 (UP from 4.636). Change PCR was executed at 6.148 high, but not extremely high. For EOW2 Fri 4/14/17 expiration PCR is at 4.465 (DN from 4.921), still inverted and with the ratios inverted it is our expectation that market consolidate at the lows here for a while and the uptrend resumes into next week, per the shape of the short term razz.
So while we sent a bearish update on April 2nd and any short trade would be profitable at this moment traders should exercise cautiousness now that the discernible part of the retrace has developed.
Targets for TNA for as long as it holds under 98.93 is 94.45 then we should expect an upside retrace to 98.93 for a final low to 92 area, chart here (link) consolidation above/around 98.93 is positive to confirm a sort of bottom of a corrective pattern that would point to 111.30 as target for TNA.
Finally let’s not forget our 82 target where underwater shorts should be sold, market seems to be working in series of 1-2-i-ii meaning that target is reasonably probable if weakness continue to show up, but we avoid getting too bearish, reversals to the upside tend to be wild since bottoms are events.
Carlos
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