Hi Gottfried! Well, the hollow red candle did its job! Talk about a reversal! Whew! I sold 2/3 of the positions I purchased on Friday. Double digit gains in a day are hard to ignore.
It's too bad these aren't normal times. The NASDAQ now has what is known as a "Morning Star" candlestick formation. This is usually very bullish!
A Morning Star Pattern is a 3 day trading pattern. The first day is a down day. The second day gaps down and stays below the low of the previous day. The third day gaps up above the second day's pattern and closes up for the day.
The star is that beautiful hollow red candle that showed up on Friday.
In addition to this, all of the technical indicators are now turning bullish. What a difference a day makes.
stockcharts.com[h,a]daclyimy[pb20!b10!f][vc60][iut!Ub14!Ua12,26,9!Lh14,3!Ld20!Lj[$spx]]
The dilemma we face, in my opinion, in looking at this most bullish of reversal patterns, is the condition of the market. Earnings will continue to go lower, consumer confidence will probably see further decline, unemployment is on the rise and we still have October to get through. October is historically the second worst performing month, even in the best of times. With bad times upon us, it's anyone's guess as to how low we can go.
Maybe we have a few more days of upside before we go back to the downward trend, but in the face of the huge rally today, I thought it was prudent to take some profit and prepare to reload.
dabum |
