INDEX UPDATE
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Had the chance to review many of the index:
DOW - completed a lower high and retesting the previous low
SPX - completed a lower high but so far a higher low
OEX - completed a lower high but so far a higher low
NAZ - still in an uptrend but could be forming a bear flag
NDX - still in an uptrend but could be forming a bear flag
BKX - appears to be a H&S, and now at right shoulder
UTY - trending down and right now retesting an important low
XAL - lower highs and lower low
DOT - completed a lower high but retested previous low and bounced
DRG - a very clear head and shoulders chart pattern
RUT - formed a mini double top and yet to retest previous lows
RLX - looks like a head and shoulder and now at right shoulder
CYC - lower highs and lower lows
FPP - lower highs and lower lows
It is obvious that there is a mixed picture, but that there is a growing amount of negativity amongst the various indexes.
I am growing more bearish but still feel that the next upswing is tradable but would not initiate long-term long positions. If the DOW gets that high, there will be strong resistance around 9500(based on the WEDGE/PITCHFORK senerio). As per my previous update, the DOW has 1-2 more potential down days before getting to short-term oversold extreme(CLASS BUY).
If one is looking to option trade the upside soon, the NAZ,SPX,OEX and maybe the DOW stocks are the areas of more strength/less weakness. I am looking at stocks like CAT, MO, UK, DD, DIS for a upside short-term trade, since they are CLASS BUYs, low option premiums, predictable, and OK chart patterns(HIGHER HIGHs/HIGHER LOWs except MO). I will also say that I AM A LOUSEY STOCK PICKER, since I mainly play indexes, so no need to attack my selection. gggggggggg
By the way, since we have been mentioning the WEDGE FORMATION, heres a good example of a WEDGE and how it broke down. TAKE a look at CAT.
Connect the highs in OCT and NOV to create the upper trendline. Connent the lows in late OCT and NOV to create the lower trendline. It broke down at the beginning of DEC.
Seeya
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