We broke the rising wedge on 3/30. At that point I had thought that was it we are headed down from there. Wedges don't have to retest their lower trend line. This one did. It is interesting that with all the hype about M2M and the G20 meeting that the market rallied to exactly the test of the lower wedge line shown in the chart above. The red dotted line is a trendline from the bear market that connects Feb highs and has been acting as support recently. At minimum I expect a retreat to 76. That will fill the gap on 3/23 as well as being about a 50% retrace. From there it gets tricky. A break lower of the red line with it becoming resistance could take us to new lows or at least the 62% retrace.
On the dailes we had a shooting star formation shown in the green circle above. Tomorrow is confirmation day. If we can get a gap down and move lower, we will for an evening star pattern which is a strong indication of trend change. A non filled gap down would also form an island top reversal which is what started this down leg on 1/06.
No break out yet in the vix:spx ratio.
1 comments:
Yes, the market was a bit giddy. Thanks for your work.
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