Friday, February 18, 2011

Possible Correction?

The market shot up the rising wedge and quickly reversed and it looks like an end of the Rising Wedge and the market going into an ABC move or a W1/W2 wave. However, it is hard to say what the market wants to do at this point so we should should see what Tuesday brings. There is a bearish cross on the MACD and the Middle East seems to be descending into chaos, so bears might just get a big down day on Tuesday. However, if the trend average (currently at 1331) holds, then we're on to 1350 for sure. I am keeping both my long and short positions over the weekend but I am leaning bearish due to the extreme optimism right now. The RSI and MACD are ridiculously overbought, last time it reached these levels was (today's readings are actually higher) in December 2007, few months before the top of the market. But this time there is no bearish divergence on these readings so this rally will probably continue after a healthy correction.

No comments:

Post a Comment