More Upside to Come?

The market ended up selling off in the morning but did not touch the level I was watching to change the trend. And instead it went to the upside and in the process confirm a new short term bullish (and intermediate if the weekly close is above today's level) trend. I never imagined, actually I don't think anyone imagined the reversal on August 31st would lead to a massive rally without a single proper Fib pullback. And given the similarities of this rally to the one in February I posted a chart today to highlight the similarities of these rallies. The rally from February last about two and a half months and became oversold on the RSI around this level (1170). But that rally kept going into oversold territory for another month until we got to 1219. Right now there are similarities in shape, time and resistance levels. And given the fact the weekly RSI is not even oversold and the DOW has made a golden cross, it points to the pattern repeating itself and if that is the case it will mean we will be going up for few more weeks. I posted on the day the market hit 1041 that we were probably going to see a reversal and if we did to watch out for the Head and Shoulders projection to 1250 on my August 31st post. And while I never thought we could get to 1250 in one shot, the probabilities are now high that it will happen. With that said, the rising wedge seems to be about complete and a collapse in prices is expected when these patterns end. However, if the market gets out of the rising wedge pattern and corrects sideways we will see probably see 1219 in a few weeks time.

I am still day trading my short position to better my cost average and won't go overnight short until we either break 1156 in an impulsive manner or we get to the very end of the rising wedge. We will probably have a gap up tomorrow so I will be looking into 1175 as a level to enter.