When it rains it pours. My SYNC road map fell apart in flying colors resembling what you find in an outhouse today, forcing me into full scale liquidation mode unexpectedly. And now it seems that my price mirrors in the Dow and Russell are beginning to experience some cracking. I have suddenly found myself in another dimension of market analysis, where the sights and sounds are not what they seem. Welcome to the stock market Twilight Zone.
In order to experience a quick exit from this Twilight Zone, I need to see a green close tomorrow across all major indices. I DO NOT want to see the Dow or Russell close below today’s lows. Should we continue to weaken throughout this week, then I will need to reassess.
This doesn’t mean I will be bailing out of my positions. Barring an enormous down day, my trend indicators are still firmly positive. But enough technical damage is beginning to occur that it needs to reversed in order to preserve the short-term bullish structure of the market. When the short-term structure falls, then the intermediate term is not too far behind. And so on and so forth. It can get ugly quickly. Especially in these thin summer months, with earnings season upon us.
And that is exactly why I have little tolerance with moves in the greater indices that are against my expectations. Minor damage can turn into major damage in a hurry given the time period we are in and the crosscurrents we face.
If there is an exit door out of the Twilight Zone, I hope I find it this week. Otherwise, I am afraid that what was once a bullish pasture filled with wonderful flowers and fairies will turn into a raging river of molten lava occupied by bear-demons with reptilian tails and serrated teeth. I prefer flowers and fairies. Let’s see if we can spot any tomorrow.