What jumps out at you on this chart? Clearly, there has been a rapid decline in Relative Strength. Your daily moving average convergence divergence (MACD) has also taken a grotesque turn for the worse, and now sports a nine-day EMA that lives below zero. Money Flow? That still looks fine, despite the wobble seen over the past week.
Investors will have to adapt to everything already mentioned in this article. Traders are trying to figure out how and where to catch a falling knife. What I see here is a last sale left hanging out in the middle of nowhere, as of the closing auction on Friday. That leaves us either in the position of being short-term oversold, or headed for further bruising as unfinished business leaves us grasping for a toehold.
The Pitchfork model suggests possible support just under 2750. The 50-day simple moving average (SMA) also looks to be curling in that direction.
We get the help we're looking for right there, and guess what? The trend will remain unbroken. That spot cracks, and we end looking for help medium-term at the 38.2% re-tracement level of 2694.
(This is an excerpt from Stephen "Sarge" Guilfoyle's Morning Recon, which now appears exclusively on Real Money, our premium site for active traders. Click here for a free 14-day trial and receive Morning Recon every day, along with exclusive columns from Jim Cramer, James "RevShark" DePorre, technical analyst Bruce Kamich and more.)
At the time of publication, Stephen Guilfoyle had no positions in the stocks mentioned.