The Qs may be temporarily halted in their advance at the 38.2% retracement from the 2007 high. The exact level is 36.52. Yesterday's high was 36.50.
From another angle, we can see that the 50dema is near to crossing up the 200dema. Take some time to review past crosses of these two important moving averages. My general observation is that more than half the time, markets will correct strongly just as or just after the crossing of the 50 with the 200.
These are just a couple of more reasons to expect that the current breakout is not for real. If the Qs move above and hold above the 36.52, then we can conclude that 39.93 would be the next logical target.
4 comments:
"My general observation is that more than half the time, markets will correct strongly just as or just after the crossing of the 50 with the 200."
Craig, you're the only person that has noticed that (besides me) that i'm aware of. Most of the references that i've seen about the Golden Cross make it seem like a slam dunk shoo-in trend trade. Nooooo, often it's like chasing Ichabod Crane's Headless Horseman into a dark tunnel & THEN finding him changing direction & riding TOWARDS you. LOL
Regards,
dave
I have been long SOHU for much of the 1st Q. Is the double top in late 07 of any concern to you ??
Volume pattern on weekly USO is horrible - increased vol into the low & decreased vol coming off of the low.
Regards,
dave
Dave,
Thanks for the comment about the 50x200 cross. My observation has been that the best course of action with all MA crosses is to wait for the pullback and confirming breakout. This has proven to be much more successful.
With regard to SOHU, the decline from the June 08 high is clearly 5 waves. The question is whether it is wave C of a large flat correction or wave A of an ongoing correction. Personally, I am willing to give it room to run back up to the old high, if it can. If it fails around 70 to 75, then it is probably in wave B up.
Dave,
On the USO, the volume looks suspicious, but the question is how well does it track oil. The volume should not be that important unless it gets too thin.
I have been happier trading the ETNs on commodities than the ETFs. They seem to track better.
We have discussed the problems with DUG before, which is why I switched to DXO and DTO for oil.
Of course, there may be tax implications, so check that out.
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