Friday, March 18, 2011

Monday Gap?

The market rallied hard in the morning almost reaching the 1290 target I mentioned yesterday. The pattern at the end of the day leaves the possibility of a gap on Monday. They way I see it, we could have a big gap down in a W1 of a bearish W3 or a bullish W3 of W3. The market came very close to the TA (1292) but it closed below it and there is a bearish crossover on the MACD so the odds favor a bearish wave. I initially took short positions at 1285 but covered them at the end of the day because the bullish wave did not have a hard reversal as I had hoped and the possibility of a bullish W3 on Monday. I will take short positions again on Monday if the market approaches 1294 or 1302 as these are the resistance levels the market will have to overcome to turn bullish.

Have a great weekend!

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