Final Rally

The current upswing from the 1/20/09 low will be the final one of the rally from the November 21 low whether new rally highs are seen or not. The Gann turn date was 1/22/09 so it can a couple of days early. The next Gann date is 1/31/09. Originally I had envisioned the 1/22 date being a swing high followed by a pullback to the 1/31 date and a final high on 2/6. It now appears that the 2/6 date will not be the high, but a stopping point on the way to new lows in February. This dull and choppy rally has been wearing to say the least, but we are now getting to a point where the trend may get moving again. As I said I would yesterday I dipped my toe into with a 25% index short position. I will add to it once the current move is over.

There are now quite a few stock short setups that are showing up, and this rally will provide the entry pivot to get short on a break of the 1/20/09 lows. Some stocks will breakdown early, so you may want to look at some new short positions next week, and add to on a breakdown. I will be looking to exit what few long positions I have left as the rally fades. While I have been stopped out of most, RIMM has worked very well and should hit my target of 64.

As an observation, it is quite common to see a shakeout reversal the day after a sell signal, therefore today's rally does not in itself mean anything.