The S&P 500 has pulled in rather dramatically

The S&P 500 (ETF Proxy – AMEX:SPY) has pulled in rather dramatically last week, and closed out right near the support offered by the daily 50 SMA.   I would expect to see a bounce now and a double top or perhaps a lower high form…

As I said last week, I am stalking an entry to the short side in Home Depot (NYSE:HD) as any breakout given the weak power is highly likely to be false and unsustainable.

On Friday, we got the reversal candlestick that I had been waiting for.  If price can take out the lows of that bar, I would be interested in opening a short trade with a profit objective in that same $94.50 area as I took profits into last time.

 

 

Chevron  (NYSE:CVX) has followed through as nicely as you could ever wish for as the weakness in the price of oil spill over into this energy stock.

CVX is breaking to new lows with plenty of power, so I am inclined to let it run and just move to protect open profits by trailing stops down a bit to above the $107.50 level.

 

 

 

With so much short exposure, (and open profits) I would like to hedge my portfolio a bit by adding some long exposure to try and reduce drawdowns during next weeks market bounce. Cisco Systems (NASDAQ:CSCO)  has been showing great relative strength in recent weeks, and is pulling in to a zone of support as indicated by the grey box on the chart.

I would be stalking this on the daily chart for a valid candlestick reversal pattern, and would set stops below that bar’s low after it forms.