Thursday, October 23, 2008

Failed Follow-Through

IBD has called the rally dead after yesterday's selloff. The market is back to correction mode. This is not unexpected as I indicated that the internals of the follow-through day were suspect. Even though the futures are down this morning, the triangle pattern is still in play.

If you look back to October 10 when the Dow hit 7882, that low occured in only few minutes, seconds actually. Other than limit orders, that still may not have been filled, there was not a great chance of buying that low. I had a buy order that did not get filled.

The upcoming low will likely have the same character. It won't be tradable. If you haven't scaled out of your shorts, you may get caught in a short squeeze unable to get filled. Remember, "Pigs get fed, hogs get slaughtered".

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