Allen, I wonder if any rally we have will be capped by strong resistance at the Sept 2001 and Oct 98 lows, which were strong support and now will be strong resistance.
Also, with the SP500 now having broken the neckline of its 5 year HS pattern, the charts would call for it to trace out a measured move down before any attempt to break back to or above the neckline. A strong rally from this point would seem unlikely from this point of view.
I read some comments by James Sinclair this weekend at financialsense.com, and he described the long term nasdaq chart as a 'bankruptcy Head and shoulders', which I have not heard before, but I guess it means that the measured move would go below zero. The neckline of this pattern has also been broken, and would seem to preclude a strong rally above the neckline at the sept lows.
I have a large short position, and am wondering when to cover, and perhaps when to go long for a short term bounce, but the bounce may be too weak and short to be worth the risk on the long side. If the SP500 head and shoulders plays out this fall, it will drop to 500 or so. Maybe I should just hold my shorts?
Robin |
