Another Shakeout Coming

The VLE and Tides Systems only need one more down close to confirm new short signals. Although we will track these signals as per the rules in the System Tracker, I would not recommend taking a short position on these signals.

There are times when discretion and experience need to be applied before taking a trade. A look at historical results for March 31, the end of the first quarter, shows that the market generally sells off in the afternoon, particularly in the last hour, as the funds and institutions unload their first quarter losers. Then on April 1, the market generally trades higher in the afternoon, particularly in the last hour, as funds and institutions load up for the usually anticipated summer rally. Therefore, any short signal generated on March 31 (this year) is likely to be reversed on April 1.

The best course of action then is to wait to see what happens after April 1. If we have trend system short signals, and the market closes below this current pullback low, assuming it does not exceed the March 25th high, it would confirm the short signals. On the other hand, if it closes above the March 25th high, it would confirm the current rally.

FSLR formed a double top on 3/28/08 at 237.35. The double top is against the 2/14/08 high and below the all-time high of 283. A successful test of the 50ema might provide an early entry to a double top breakout. A close above 237.35 would confirm the breakout with a first target of the all-time high at 283.