Monday, August 24, 2009

TLEOs Breakout Attempt Fails

Taleo Corp looked as though it was going to have a smashing breakout in the first hour this morning. Unfortunately for me, I had to leave the office for much of the afternoon. I returned to find all the breakout gains gone on the highers volume of the year and sold for a small profit. I was long from 18.90 on a lower pivot. TLEO did not hit my first target of 23.90 so I did not take partial profits intraday. Either the breakout was a 5th wave breakout from a triangle or wave b of an expanded flat correction. Of course there is the slight chance that it will hold here and resume the uptrend, but it's not likely. This is the kind of thing that may occur with greater frequency as we approach the end of the rally. This is also why traders should be very careful about trading breakouts this late in the game. IBD names tend to do poorly in the latter stages of a rally as well.

We may see another shakeout over the next 2 to 3 days before the final thrust up begins in earnest. Regardless of expectations that the rally will last until late September or early October, we must be on guard for weakness that materializes sooner. Higher prices the first week of September that quickly reverse and trade below the August lows will be a sure sign that the rally is over sooner rather than later.

I will be looking primarily for swing trades over the next 2 to 3 weeks if any setups occur that suit me rather than intermediate term trades.

Gold is now wound up so tightly it feels like the spring is going to break. Which way will it go? If silver is any indication, it will be down, as silver looks to have completed an abc rally. Oil is at a crossroads here too. Oil tends to follow gold with about a 40 trading day delay. Based on that oil is nearing the end of its current rally. There may be one more up/down sequence, but I suspect it will not move up to 85 or 90 as many expect.
Be careful.

1 comment:

dave said...

Kind of a strange day - mkt indices largely ignored reversal & slide in crude & profit taking in stks like COCO.

Yesterday, SPX had a doji candlestick followed by a gravestone doji today. So, back-to-back days with little net progress & closing near the lows.