Thursday, March 12, 2009

Dow Approaching Resistance

Markets followed through today including the Dow which is now approaching channel line resistance and resistance at the November 2008 low. Any significant movement through this resistance without a retest of the March lows will signify primary wave 1 is complete. For the Qs, primary wave 1 is most likely complete at the March 9 low. Any pullback here in the Qs is probably a second wave.

The one thing which could hold the bulls back is the rapid swing in sentiment signified by the low put/call ratio. However, this one fact alone cannot negate an intermediate term rally. Only price can do that.

I was surprised at the extent of today's rally, but the % gain on the Dow was lower than Tuesday's and the volume was lower, which fits with a small degree 5th wave. Thus, we have wave a of 4. The action over the next three days will probably tell us where we are. I would not be adding any short positions at this time given the market behavior.

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