Sunday 19 February 2012

Conflicting signals

A short post today. Tomorrow is President's Day and the US market is closed. It left us on Friday with conflicting signals. On the one hand it clearly broken through the 12875 resistance level I have bee watching for several days now (see Thursday's's post). It was not a dramatic rise, just 46 points, giving no suggestion of a climactic end to a rally.

On the other hand there was spike in volume. As you may recall I have demonstrated that, in the past, almost every spike in volume predicts a change in direction in the market. I show this again on today's chart. However, the last volume spike signalled nothing. Also there has been a radical change in the character of the market ever since the 21st December. The violent movements, both up and down have subsided and we seem to be following a smooth upward path.

Betting that that will continue, for a while at least, is where my money is. I wish my strategy was yielding better returns at the moment but I am not losing faith. I will have to wait till Tuesday for the first inkling as to whether I am right or not.

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