Tuesday, May 26, 2009

This Is What I Am Talking About

We've seen a huge surge in the indexes during the first hour of trading this morning, but caution is advised. It appears to be wave c of a upward flat correction. We need to see a solid move above 35.04, or a 1 to 2 hour pullback followed by a breakout of this morning's initial high to confirm that the uptrend has resumed. This is the type of situation I was referring to in yesterday's post when I said to wait for confirmation after the first hour of trading. You don't want to get caught in a sucker's rally. The corrective pattern may have morphed into a triangle as last Friday's low did not go below the 5/13 low, or we may be in a larger b wave of a flat that will retest the high of 35.34 before wave c begins.

The TRIN is holding up above 1.40, although in a downtrend, so this doesn't yet appear to be the real deal. Normally, the TRIN will be below 0.90, preferrably 0.60, for sustainable rallies.

Volume is high which could support either outcome, bullish or bearish.

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