Wednesday, October 22, 2008


We’re broken “the triangle”, that dreaded zigzagging consolidation zone where most stocks made zero progress for the past 10 days. Today’s gap triggered it all by breaking through two short-term resistance areas and being unable to fill the gap, had no other choice but to “flag and fail”. We also hit a short-term intra-day selling climax which was very visible from 3:00-3:30PM. Is it the bottom? I don’t think so. We have a much greater chance of testing 1) October 16th’s low and finally 2) October 10th’s low.

As for breadth, we did pretty good considering the massive drop we had today, but we’re still in the area of having new highs in the single-digits and new low in the multi-hundreds. I kept saying that a rally cannot take place with these numbers being hit. This trend has been going on for weeks now and as long as we’re in neutral/negative territory, the market’s breadth will only get worse. We had slightly increasing volume today compared to yesterday and Monday, but it was all mostly selling volume and not true buying volume. The market will break consolidation to the downside in full force if this is not taken care of quickly.

As for breakouts and breakdowns, I found two clean breakouts and numerous breakdowns. The first two charts are breakouts and the rest just sort of died today. They all have my comments on them.

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