Sunday, February 28, 2010

Weekend Update

There is only one thing to focus on from here: where do we close on Monday. The reason I say this is because we have now reached the maximum retracement allowed for the bear count. Not only have we touched the 78.6% retracement with a rejection, but we tested a key trendline, and we are bumping up against the 34 daily SMA. If the market is able to shrug off both of these critical areas, then that means that the market has more buying strength than a wave 2 correction should have. In fact, I believe strongly, that if we close above Friday's high any time next week (the highest probability coming either Monday or Tuesday), then we will likely test and possibly exceed the highs seen earlier in the month. On the otherhand, should we close below Friday's low anytime during the week (again VERY likely Monday but still a possibility Tuesday), then that would signal the trigger for the resumption of the bear move and we should see some real selling for the coming weeks.

Let the market speak.
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