Monday, January 10, 2011

Descending Wedge Pattern or Descending Triangle?

The market stopped again at gap support and on the SP the pattern looks more like a Descending Wedge, which is bullish and indicative of higher prices to come. But on the Wilshire, the pattern points to a Descending Triangle which is a bearish set up. So we have two options ahead of us that will become clear in the next couple of days or so. The one thing that supports higher prices right now is the fact the index keeps closing on the level I post on the right. To turn bearish, the market should close underneath this number consecutively to mark a turning point. But so far, every time this level gets bounced off from (and it has been happening since 1230s), a rallies ensues. So we'll see if this will be the case again. With all the "good" earnings coming, I wouldn't be surprised.

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