Sunday, February 7, 2010

Weekend Update

Sorry it has been another crazy weekend. Let me first emphasize that there is nothing in the charts showing a completed pattern of any significant size that would justify a major rally at this stage. Any upside from here should be capped in the 1070/1075 area but could reach as high as the hourly 34 SMA (currently in the 1084 range but dropping). Instead, this looks like a classic subdivision of a wave 3 with minuette wave 1 finished on Friday and we're now in minuette wave 2. I know there are a number of oversold indicators, but that is the nature of a minute wave 3. It will continue to push oversold conditions for a long time. So, that is my target for adding to my short position in a big way: 1070-1080 range.

I'm looking for a little weakness tomorrow morning before pushing to higher highs, but you never know what the market will give you. However, too much weakness will likely crack open the dam once again, so be careful on playing any intraday long trades.
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