More Hype? Yawwwwn…
The indices are green this morning, and with that comes the talking heads
giving us the proverbial “all is right with the world” rhetoric. While
today’s action is encouraging, we are far from being completely out of
the woods as to a possible retest of the April lows. Here is why I would not
rule that out just yet.
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Today’s action has taken the S&P 500
(
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PowerRating) back
above the neckline of its head-and-shoulders pattern (the Naz and Dow are
showing similar formations) but it is normal for a retracement back to the area
of the neckline once it is broken. Until I get some further continuation
back into the shoulder, the indices remain vulnerable.
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Whether you see the pattern I see, or see an inverted cup and
handle and a bearish Bow Tie as Dave Landry spoke about last night, the message
is clear — proceed with caution until you see how this plays out. Don’t believe
the hype that “we have hit a bottom.” Either way it decides to go, the
signal will be telling. If the patterns fail and we do see a rally, the move could
be fast and hard, as fast moves often come out of failed patterns. In the event
of a breakdown, the probe toward the April lows will give traders ample
opportunity to take advantage of the move down.
Until tomorrow,
Duke
P.S. Now from the purely for your enjoyment department. Ever see
that TV show “The World’s Dumbest Criminals”? They should place this brash
young buck in the Hall of Fame!