Wednesday, June 2, 2010

Top of Triangle or Wave 3?

Seems like yesterday's move serve to fool everyone. It seemed at the close yesterday that it was a start of wave 3 down but it quickly reversed in the morning. The overall trend is down and I favor a drop tomorrow to a higher low relative to yesterday's drop. How low it will go will depend on whether this is indeed a 3 wave or part of an E wave to the lower trend line of the triangle. I think it's important to note that there is an obvious head and shoulders target and the 200 DMA. Therefore, if there is any sustained momentum, I personally will be abandoning shorts and possibly even going long on an intraday basis. There is a lot of volatility now and the market doesn't owe anyone a "P3" nor the H&S target.

So tomorrow, I favor a drop to the low 1080's area before resuming the uptrend.

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