Richard,
Here is a copy of Jack's next post which somewhat clarifies his views on a "Head and Shoulders" reversal.
Regards,
Jules
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All: Well, as usual when we have had a pretty good day like last Friday, the markets the next trading day seem to either go in reverse or not change all that much the next trading day. That was pretty much it today. The semiconductors had the most problems as many in that group went down. A number of them are on lower lows.
INTC along with the rest of the Big 4 techs held up rather well considering everything. Yet, I do not like the relatively low volume that we had in it today. Nor, did I like the selloff off of Intel's high late in the day.
I have mentioned the possibility of a head and shoulders pattern developing in INTC. This is just meant to be an alert of sorts as only a significant closing break below 80 will signal this normally bearish pattern being violated. Should we go to higher all time high or hold above the recent minor low on our next pullback - that would negate any problems of a head and shoulder pattern. Instead, we would have much smoother sailing.
I had mentioned quite some time back that when the Dow went to new all time high that I had to believe that the powers that be would not let us get away from up here without first taking the Nasdaq and MSFT to new all time highs as well. Since then, the Nasdaq was earlier taken to its all time high. Now, it appears that the MMs are attempting to get MSFT up there to its all time high past 100.
Apple came out with a bad preannouncement concerning its future earnings/revenues. They did qualify it some, but it will remain to be seen exactly what we have here. Whether it will tank the other techs or not should become apparent tomorrow. Tonight, as I write this note, the Globex is 700 points down in the Nasdaq. That really is not all that much.
Tomorrow, the trade report is coming out and we will have our deficit as usual. Whether it causes any problems for the markets will depend on whether it is exceptionally worse than expected.
Although the semiconductors for the most part took their lumps today - I still like the group better than the rest. But, again, they will pullback and correct just like any of the others should the markets go down.
So, in conclusion, tomorrow we watch things closely to see if we maintain our higher lows and higher highs or we reverse that situation as shown by lower lows. Tomorrow, for sure, watch the gaps and whether they fulfill my gap rule. If they do close them plus that 5/16 of a point more below their closes of today - it often signals a reversal from the direction of the original gap.
GoodTradingJack
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