The collision of global markets and social mood

Wednesday, April 18, 2012

Straightforward . . . And Maybe Straight Down Soon

Finally a clearer pattern.  Finally 1388.13 was exceeded.  Today will hopefully be straightforward: either a shallow correction down to as far as the 1380 area and then a possible new high, or the start of a the breakdown.  

After yesterday, 1400 is still possible though.  It's the 61.8% retracement and trend line resistance.  Often when the market breaks a major trend line such as this one, it backtests it from below.  This could be one of those times, so don't be surprised.

As I noted on Twitter, barring a high volume breakout much above 1400, the market looks set up for a significant decline.  Let it release whatever information it has.  Just as falling wedges started to appear just before the market broke down several days ago,  I can't remember the last time I saw such a clear corrective pattern after such a straight line impulse move down.  The fact that it's done so on light volume only adds to the suspense.

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