Monday, July 13, 2009

Neckline Retest Complete?

Well we finally rallied back up to the neckline of the HS Top pattern in the SP500 and the Dow today. Intraday the pattern of the move looks like it may be complete or nearly so. We are now at a critical juncture. If the market follows-through tomorrow and closes back above the neckline with gains greater than 1.5% to 2%, we would need to consider that the HS Top was a failed pattern and be ready to add to and increase long positions. A website that I subscribe to issued a confirmed sell signal on Friday which are usually pretty accurate. I only found 3 in the last 9 years that did not result in at least some downside continuation after the signal. This may be one of those times, but this is when patience is rewarded. Let's wait for clear confirmation of an upside reversal before jumping back on board that train.

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