MARKET COMMENTARY

For the first time in three weeks, the market was very orderly and unsurprising. It surged 400 points in neat pattern. Certainly, the market became less fearful. This should serve as good news to the value investors. But, there is no guarantee the bear market is over. On the contrary, I think it still has room for further drop. But it should not be as panicky as before. This calm sentiment is reflected in the VIX index ($VIX) which fell 24% in one day. This can be the start of market stability.

Anyway, the Dow’s chart did not suggest further bullish momentum for Tuesday. There are two reasons. First, the triangle chart pattern is still valid. Triangle is a trend continuation pattern. Hence, the bearish trend is not over yet. As I said before, there should be one more crash (which can be regarded as aftershock) before the bleeding stops. Second, the volume shrank in soaring price. This is not a sign of support for the bullish move.

Nevertheless, I am still unsure how the market will react in the next few days. I think we shall wait for it to present itself on Tuesday before making decision. The breakout of the triangle is the tell-tale sign of next price actions for next few days.

DJIA Daily Chart

The Russell index rose in tandem with the Dow. Watch the support or resistance breakout for entry point.

RUT Daily Chart

No much difference to mention for Nasdaq. Do the same as to the Russell above.

NDX Daily Chart

STOCKS TO WATCH:

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