One point came to mind after I made my earlier post. It is possible that markets will just continue higher next week to new rally highs with only a modest 1 or 2 day pullback in between. In that case, traders will need to be on guard for an earlier end to the rally. In fact, if the rally continues to new highs while volume continues to decline, it would be an indication that wave 5 is coming to conclusion.
While looking through a number of stock charts this afternoon, there are a fair number of bullish setups. It has been my experience that the largest number of bullish looking chart setups occurs at or near market tops. (Note: this may be a bear market phenomenon. Most of my trading experience has been during the secular bear market that began in 2000.) Why that is is a mystery to me, but it seems to trap a lot of traders. There is a tendency to want to trade these setups, increasing long exposure, at just the time that markets are ready to turn lower. So again, caution is advised.
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"It is possible that markets will just continue higher next week to new rally highs with only a modest 1 or 2 day pullback in between. In that case, traders will need to be on guard for an earlier end to the rally."
I can totally agree with that because we have often seen that type of price behavior. Picking "tops" & "bottoms" isn't nearly as hard as accurately projecting follow-thru.
"Why that is is a mystery to me, but it seems to trap a lot of traders."
I think it's the "light at the end of the tunnel may be a freight train" phenomena & a necessary one.
i'm fearful that it will be like the T at the end of May. Broke to a big NH then traded sideways for TEN days before breaking down.
And even then most of the decline happened in 5 days out of a 20 day correction - a CHOPPY decline.
Like Toys "R" Us; tops is broad
We rallied 80 Dow pts off of today's low. I can't remember when we had such a lame 80 pt rally in the A/D. May be in June/July, but i just don't recall.
We might have a prelim peek at INTC if you look at an hourly chart of SMH. It looks like it has one big up move ahead after today.
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