Wednesday, August 10, 2011

1101 to be tested?

There was no follow through buying today after a very bullish close yesterday so the which way the market is going next is a guess at this point. Pattern-wise, there is a potential Diamond bottom which would call for a rally tomorrow. Using EW, the market could be in a flat (a test of 1101 would confirm that) or an expanded flat (1088, 1096?) or alternatively in the middle of a bearish W3 again. So tomorrow should give us a clue as to whether we are close to the bottom. After so much selling, I would assume we are close to the bottom but it's not good to trade on guesses. My position got stopped out last minute (literally) at break even so I'm looking to see how the market trades before committing again. I originally was going to sell using the TA at the minute level but the gap down was so pronounced, I decided to hold and see if a rebound would come. Tomorrow, I hope for 1101 to get tested to get back in but either way is fine with me. Lastly, I am really inclined to sell my gold position taken earlier this year now that we are close to $1800. The TA on that tells me to keep holding but it's very tempting to lock in profits now as that market is as overbought as the stock market is oversold.. maybe I'll sell half my position first.

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