Tuesday, July 7, 2009
Once more unto the breach?
Not just yet my friends. Oddly enough on the way into the office today, my receptionist, who only vaguely knows what I do professionally, mentioned the imminence of the confirmation of the Head and Shoulders pattern playing out on the major indexes. When it is that obvious it usually is not. No doubt a series of powerful body blows has been delivered to the ever annoying green shoots crowd. God knows they had it coming to them. Funny to think that Dennis Kneale of CNBC fame may have ushered in the great retracement of 09 with his end o recession rants of late!
It would appear the neckline of the classic bearish pattern was penetrated.. on lower volume however. Some would argue that a target of 800 to 810 on the S&P is imminent. I feel however that a good deal of support exists at 875, an area of key resistance on the way up, which will now act as support on the way down. A gap down on Wednesdays open could set the stage for a dramatic reversal trapping a lot of late/lazy bears, leading to a squeeze and run to 900 to 905. I have long been calling for and investing for a test of the very area we are now at. I have been fading this drop and adding small longs into today's close. Futures eerily quiet as of now, tomorrow should be epic, good trading!
Posted by ex_wirehouse at 7:20 PM