Monday, November 10, 2008


4 out of 9 sectors are above the 20-day MA and 5 out of 9 are below the 20-day MA. Every sector has experienced a sizeable volume drop off and a breakout of breakdown is expected to occur shortly (may or may not be “immediate”). 7 out of 9 sectors formed an “inside day”, meaning the market could be taking a breather for a continuation to the downside, or it can the beginning of a counter trend move for an unspecified number of days.

The XLB, XLY, XLF, XLI, and XLK will all have to test their 20-day MA resistance areas (marked in green boxes) before they can proceed higher. Another thing to note is that the open-close range on Monday’s candle (if positive) must exceed the open-close range of Friday’s candle. Otherwise, the market will most likely reverse to the downside via a narrow range day. About half the patterns are forming “possible” inverse head and shoulders patterns and the other half are forming symmetrical and ascending triangles, and possibly wedges.

As this moment, China’s news on the $586 billion stimulus has gapped up the Asian markets and the U.S. futures market. Monday’s close will give a more clear direction for the markets this week.

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