Wednesday, April 1, 2009


Today was the perfect example of a day where you had to stand firm if you were short. There was no reason to cover despite the market killing most of your gains. You must know that, statistically, only 1% of breakaway gaps fill within the first 5 days. We marched to the high of the first opening gap's bar and quickly failed, unable to fill, unless you were the Nasdaq (COMP). Right now, it's a fight for the 50-day MA for the SPX, DJIA, and RUT. The COMP formed a shooting star, a 'warning from above'.

Yesterday's action confirmed the breakaway gap in several sectors, most notably in energy, cons. staples, and industrials. Further, the cons. disc. and materials sectors formed a 2nd consecutive doji, signaling major indecision. Health care formed a black filled candle at it's uppermost resistance and we can see shooting stars in tech and utilities. All are potential reversal patterns. The financial sector is actually the strongest sector, but I'm not concerned at this time.

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