Tuesday, January 27, 2009

Almost made it ....

Well the morning was setting up like a text book example. We had our rally off the open, retraced slightly and came in with strong buy volume. After having reached 850 however weakness set in. We traded closer and closer to the 840 that I thought was going to hold and broke for a 50% retracement. While this is to be expected and normal I would have liked to see more strength especially in the late afternoon. Closing below the 840 shows that the bull needs to come up with some more strength in order to continue.

From a trade perspective, I traded just a little as I saw the weakness in the market place. However those were very short term range positions. Sometimes its best to wait and see what the market decides especially with the action after 3:00 which clearly showed further weakness.

We we are technically in an uptrend now so we need to ensure we will remain above the 840 and give the 857 a test here. Since we did not have the strength yesterday we can still follow up today with another up day, something I believe will occur with a close between 850 and 857.

How to trade this?
We have some great trades ahead of us again. We have the 840 range which gives you great protection but gains are limited. If we break 840 on the upside best chance is a run to 850, potential 856-857 so its 10-15 points. A break below the 840 will get us back to yesterdays low, though it is my expectation if that is to occur it will stop at the 833-834. A break of this range will of course bring us back to 820. So we have good potential for trades here today.

So keep those numbers in mind for today, and stay cautious. We still have potential to go into either direction though it is my feel we may test the upper ranges of the triangle I had shown on Saturday.

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