Tuesday, April 26, 2011

Break out or is this it?

The market traded higher as I expected on my post yesterday and it'll be interesting to see if what we saw today was the beginning of a break out or the top for this wave. I expected resistance to be tested and today we did but the high makes me suspicious. If this was a stock, I would assume it is breaking out. But since we're dealing with an index, I favor a correction starting tomorrow or the day after to test the TA/rising trendline and then go into a W3 that will blast past resistance. There is a bearish MACD cross and the Stochastics also favor a pullback. I shorted at resistance (1345) today and I am hoping to cover at the retrace of this wave, ideally in the 1325 area. And unless the market falls off a cliff there, I will be going long there to ride the coming bullish wave.

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