Monday, May 3, 2010

Start over...

It was pretty obvious Sunday night that we weren't going to get a gap down Monday morning with the futures enjoying the drug of yet another bailout. So where do we go from here.

Well, I've tried to narrow down the options. Two of them are part of a triangle and a 3rd is big time bearish. The reasoning with the triangle is that we have back-to-back .786 retracements. I always go to a triangle when this happens, but here is my ranking:

#1 Bullish Triangle: we have a-b-c-d complete with e to come tomorrow. We thrust out of the triangle to new highs and then finally collapse.

#2 Outright Bearish: we have a 1-2, 1-2 count going and tomorrow morning we collapse. This would definitely catch most of the players off guard, but I still rank it as low based on the price action we have had so far. I would look for a gap down tomorrow morning that keeps on going. A filled gap down would point to #1.

#3 Bearish Triangle: we have a-b-c with d and e to come. We thrust out of the triangle to head lower before the bulls find the buying power once again and we retest the highs. I would really hate this scenario because I'm very ready for this market to rolloever ;-).

Best in trading tomorrow!
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