Remember that pipe bottom we had that formed the November lows? It's "possible" that we made one. I cannot say with as much certainty for this one because you can compare the volume levels between the two. If you don't know what a pipe bottom is, notice the red and white long candles in November and how they "canceled each other out". They are effective short-term reversal signals.
I am expecting to swing long this market and enter longs on any decent pullbacks. If you look at the 10-day chart, we formed a cup, and the question is "do we form the handle on it or breakdown like a dumped gf"? This is why I like to wait for a successful test of the handle, if there is one. On the breakdown, I will add shorts.
Either way, there is quite a bit of significance to the move that occurred yesterday. First, it canceled out Monday's losses. This at least gives the market some hope for a bounce. Second, the bounce occurred on the lower trend line of the DJIA's down sloping channel, the COMP bounced off of 1400, and the SPX on the 740-750 major support level. This gives added significance to the move. The downside to this? Someone can open their mouth and plunge the markets immediately.
I have no comment on Obama's speech yesterday except for the fact that there were A LOT of promises made. I don't know man...
I'll be taking it easy today due to my swollen mouth (double root canal yesterday + the 'feel good' drugs I have to take).
Wednesday, February 25, 2009
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3 comments:
Yeah, I see the cup in your first chart. But look at it again, the handle's already there...on the left! Ha! Seriously, though, Cup-&-Handle is supposed to be a continuation pattern, right? Does that mean it will continue DOWN?
Stewie has also posted an article by Robert Prechter warning against shorting for much longer. But if you look at Ritholtz, he's pretty upset at CNBC for cheering a 'capitulation' so soon.
As for me, I put some IRA money into IVV on Monday... been waiting a while to do that.
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It can be a continuation pattern, but also a reversal pattern. I call that a 'scoop' pattern. I haven't seen capitulation yet.
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