The Dow Jones Industrial Average and the NASDAQ were each down more than 2% on Monday. If you've been following Steve's Market Forecast Commentary, you saw the pullback coming.
In his Commentary before the market opened Friday morning, Steve wrote, "I'm expecting to see another pullback to the 30 DMA [30 day moving average] in this next short term cycle decline. That is likely to develop next week after the short term cycle peaks in the next session or two."
And following up in Monday's Commentary he said, "Short term cycles were topping out on Friday and will begin rolling over this week...Don't be surprised by a pullback that resembles 6/11."
"Therefore, continue to use stops on intermediate term trades underneath a 21 or 30 day moving average. You can also continue to trade for bearish profits short term by watching the intra-day ETF's using the 8/8 crossover averages which have been very effective in these faster momentum/short term moves."
Hope you weren't on the sidelines during this opportunity. Use the DXD and QID, which are inverse ETFs we use to trade the Dow and NASDAQ, respectively, on down moves. At the close on Monday the DXD was up over 3% from its Thursday closing price. And the QID was up almost 5% from its Thursday close.
Steve put it this way in today's Commentary: "Cycle analysis is the one tool in our technical arsenal that is designed to measure 'time', and the one tool that lets us predict when turns are coming due."
