The Market Index That Everyone Needs To Pay Attention To Right Now

Welcome back everyone! Let’s get right to the answer the question. What is the one index that we have to watch right now? It is the RUSSELL! We were watching it from the moment we walked in the door this morning.

We were almost completely off the highs. We were 80 or 90 percent off the highs on the RUSSELL. The DOW was at the high at the time. The S&P was also right near the high. The NASDAQ was very close to the high. However, that was a little more off than the other ones. I have been saying for a long time to watch the RUSSELL. I haven’t been overly focused on trading the RUSSELL recently. I have been doing more trading on the NASDAQ and those types of things. It is still the instrument to watch.

When we were well off the highs today, that was a problem. Now you can see the end results! The DOW lost some of the luster. That ended up around a third off the high. The S&P was around 2 thirds off the high. The NASDAQ was right near the low of the day. That was all because the RUSSELL got banged up today.

There were a couple of my key indicators that weren’t firing off. We had several types of tools that just weren’t firing off. That was one major problem.

We also had an hourly Kobo. I have also taught you many times about the IRB. We not only stopped the markets from going up. We actually drove it way back down. That made a distribution bar. That created a big resistance band going into the future. That was another thing going wrong for this too.

We had indicators that when they fired off, were firing off late. There are a couple tools that I don’t like firing off within one or two bars of each other. It took around four bars. To make a long story short, it had very low energy. While it was going up, it wasn’t trustworthy. Because the backdrop was strong on the hourly, 15, and 5 minute charts, I did actually take a couple long side trades. I did end up keeping my stops tighter because we were having the lower energy situation. There were many warning signs on the 1, 2, and 5 minute charts.

We also had negative divergence. We were making a higher high in price but a lower high in the underlying indicators. That was happening on the intraday type charts. These concepts do apply to daily and weekly charts as well. We started to have this market pull back. You saw the end results that came of all of this. There was a major push down at the end of the day.

It is really important to watch the markets both as a day and swing trader. I want this market to break down below the midpoint of the channel that it held today. That was around the 1675 area on the RUSSELL. If we start breaking down below that area, it could lead to exaggerating selling to the downside. That could lead to nosebleeds. Instead of getting punched in the face, it is good to watch those levels. I want to keep us on the right side of the trade.

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