As I said in my last post, "the DOWNTREND established from the January highs is still intact." "The downtrend and uptrend are converging upon one another, and only one direction can win out." That pattern of events still applies. Todays action, however brutal, was not a break of the longer term trend (from the Oct. bottom). Take a look at the monthly charts for DOW, NAZ, TRANNIES, GE, CMB, GM, T, S&P, DELL, CSCO, INTC and I'm sure many more of the high fliers from the past couple of months and you'll see long term bullish patterns still intact. With a noticable exception of the RUT and IBM, which is something I do not take lightly. I'm sure there are many more charts out there that are equally bullish and bearish, but who can cover them all. On an intermediate basis there was severe damage done to quite a few companies that I follow. If that trend continues here it would obviously affect the longer term bullish patterns. Therefore you almost have to weigh the intermediate term trend more heavily because it is this that eventually evolves into the bigger picture. But because my main purpose for posting on this thread is determining MDA for the OVERALL direction of the markets; not the short term market swings, within that overall direction. My position is still bullish. Besides, based off the charts, these high fliers are not yet in a position to just fall apart. IMO, we need to see a few more weeks of backing and filling (with a downward bias). I believe the internets as a group, are much closer to breaking their consolidation patterns. And perhaps will lead the overall markets in the direction they eventually break. CYSP, ONSL, AMEN, BAMM and CYCH are especially vulnerable here.
Many of the small stocks I follow are still holding up well and are showing little signs of weakness compared to the big boys. Some keys things to keep an eye on here would be divergences that pop up between indexes or industry groups. The trends on the VIX, gold, dollar, and interest rates should be closely watched. We are close to seeing major shifts in all of these indexes. Plus the presidential thing. A major break one way or the other is close at hand.
Good luck trading.
SO |
