Monday, April 27, 2009


It appears that the swine flu cannot be contained. It's spread out in different geographical regions in the US. The incubation period is one day, and a lot can happen in that one day. The number of cases should increase dramatically as more people report it. Since there are no deaths, it seems like the strain is non-lethal to Americans, however, the sample is too small. We need a larger sample size, it is inevitable. Don't make contact with anyone that looks sick (coughing, sneezing, congested, tired, aching, etc.)

The entire day's action was fine, except for the last hours. There was mass confusion and indecision. There were irregular spikes up and down. This itself is not bullish at all. Let's call it a flag within a flag...within another flag:

Now depending on the time frame, the market trend can be either bullish or bearish. Both longs and shorts can be right within a neutral flag (first flag), as long as their time frame is correct. If you went long at the bottom, then we're still in an uptrend. If you are short, you can catch the pullback, and possibly more if we break down. It all depends on your entry & exit, which is determined by your targets, time frame, and other factors.

If you look on the 10-day chart, the 2nd flag is marked in green (diagonal). Support is at approx. 846 and resistance is at 875, which coincides with many of resistance levels. The third flag, marked in sky blue on the 5-day chart, can be seen forming over the past 2 days.

This is why suggested the past few days for both longs and shorts to hedge with something. Either that, or this neutral range will hit your stress points. These ranges will cause you to make bad decisions. For swing traders, this range is especially deadly. I've seen these traders impulse buy and sell like there's no tomorrow. For day traders, just stick to what you do best.

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