Wednesday, February 18, 2009

Pause Day

It seems to occur with great regularity that the day after a macd sell signal is an up day or a pause day. Today was a pause day that closed poorly. Whether or not we get another bounce tomorrow is an open question, but nothing that happened today affected the status of the trend. In fact, IBD finally called the "market in correction". It is rare that there is not some downside follow-through after such a market call by IBD. So we have another nail in the coffin.

The Qs came close to a 3 week sell signal today. Maybe tomorrow will be the day and then all the ducks will be in a row. As I said yesterday, patience is the key here.

Just one note of caution. I don't think it will happen because of the cycle timing, but there is still a remote chance that today completed wave D down of the triangle that just won't go away. If the Dow moves under the November 21 intraday low even one tick in the next few days, then we can eliminate the triangle. However, it we were to get a sharp rally out of the blue before undercutting the previous low, it would not be a sign to bail on shorts since once wave E finishes, wave (5) down would begin. In other words don't get caught in a bull trap here.

1 comment:

dave said...

On Tuesday, Feb 10, you wrote, "A break of 29.69 in the Qs, the January 2nd opening day of the year low, would confirm the downtrend."

I believe the low that day was 28.74.